Cover Story

NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013 : Panacea For Growth, Saluting The Best

Nov 30, -0001 0 11 minutes 23 seconds to read

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Towards Prosperous Nepal

Nov 30, -0001 0 8 minutes 2 seconds to read

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Towards Inclusive Growth

Nov 30, -0001 0 13 minutes 52 seconds to read

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Nepali Banking In Transition Through Mergers And IPOs

Nov 30, -0001 6 33 minutes 26 seconds to read

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Revisiting Nepali Consumers: Facts, Trends & Business Impacts

Nov 30, -0001 0 14 minutes 47 seconds to read

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Young Consumers Have Smart Perspective On How To Spend Money

Nov 30, -0001 0 3 minutes 8 seconds to read

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When You Build Your Own Brand You Are Able To Command A Premium Rate

Nov 30, -0001 0 4 minutes 18 seconds to read

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New Year Hues: Products, Promises And People

Nov 30, -0001 0 32 minutes 7 seconds to read

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‘We Need To Develop Our E-commerce First’

Nov 30, -0001 0 5 minutes 12 seconds to read

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‘Companies Should Focus On Building Brands, Not On Selling Units’

Nov 30, -0001 0 2 minutes 56 seconds to read

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Media Convergence: Impact On Business

Nov 30, -0001 4 24 minutes 29 seconds to read

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Insuring Nepal’s Aviation Risks

Nov 30, -0001 0 20 minutes 18 seconds to read

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Nepali Insurance Companies Are Paying Big Premium To Re-insurance Companies

Nov 30, -0001 0 5 minutes 23 seconds to read

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The Pooling Mechanism Is To Stabilize The Insurance Market

Nov 30, -0001 0 2 minutes 57 seconds to read

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We Are More Aware About The Safety Concerns Today Than In The Past

Nov 30, -0001 0 5 minutes 37 seconds to read

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No Laughing Matter

The Sweet Rewards of Power

By Madan Lamsal

. . .
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NEPSE

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			'title' => 'NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013 : Panacea For Growth, Saluting The Best',
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			'content' => '<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&ldquo;The political agenda dominated the national discourse and popular action in the last six decades of democratization of Nepal. Now is the time to evolve into the phase of economic agenda being on the top. The private sector of Nepal is the engine of growth, being efficient and cost-effective, and the government is to facilitate it through investment security, enabling laws like new Industrial Enterprise Act and Foreign Direct Investment Policy, et al.&rdquo;</div>
<div>
	&nbsp;</div>
<div>
	Thus spoke Shankar Koirala, Minister for Finance, Industries &amp; Commerce, Government of Nepal, inaugurating the maiden edition of the NewBiz Business Conclave &amp; Awards 2013, held in Hotel Soaltee Crowne Plaza on August 24.</div>
<div>
	&nbsp;</div>
<div>
	Nothing could have captured the mood, the spirit and the essence of this Conclave better than this statement. The Conclave was dedicated to finding a roadmap to doubling the economic growth from current 3.6% growth of the GDP to 7%, and beyond.</div>
<div>
	&nbsp;</div>
<div>
	In groups of three to five speakers, a large number of fore-ranking economists, thought-leaders, businessmen and invited guests from abroad focused on what may make the great Himalayan promise fulfilled and Nepal moving from the status of Least Developed Country to a Developing One within a decade by doubling its growth.</div>
<div>
	&nbsp;</div>
<div>
	&lsquo;Yes! We Can!&rsquo; was the spirit. &lsquo;Can Do&rsquo; was the motto. Even problems were noted as challenges to be tackled sooner or later. Indeed, for some time past now, in spite of several economic challenges, there has been a gradual amelioration of the situation too.</div>
<div>
	&nbsp;</div>
<div>
	Decades of political unrest, bitter ideological conflict, a shaky frame-work of democracy, despondency among some sections of the people, and challenges to entrepreneurship and of infra-structure have surely brought in an air of hopelessness among some youths. And, there is a large number of educated or skilled youths who are leaving the country for greener pastures around the world. It is not a wonder that Nepal receives as remittance equivalent to nearly a quarter of its GDP.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Not withstanding the challenges, every Nepali at heart dreams for turning the nation of exquisite beauty into the Switzerland of Asia. Every educated Nepali rightly wants to reap the best economic advantages of being land-locked between two large and fast developing neighbours, India and China. And, today, most adult citizens of this nation are waiting for ensuing elections to be held in time and peacefully, and political parties agreeing on a common economic agenda to take the country into a prosperous future.</div>
<div>
	&nbsp;</div>
<div>
	That was the spirit of the speakers in the Conclave (more details in later sections). Just a sampling of the views expressed in the Conclave:&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Last year service sector in Nepal grew by 6% and industry by 3% and hence it is not difficult to achieve 7% overall growth in a couple of years in Nepal. Industries here are running at half their capacity and just a better capacity utilization with a better labour situation and investments will double the growth.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Dr Yuba Raj Khatiwada</strong></div>
<div style="text-align: right;">
	<strong>Governor, Nepal Rastra Bank</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Vocational education is on the rise in Nepal, which is encouraging. The small and medium industries sectors are surviving by sheer hard work rather than an enabling business environment, and they must be encouraged.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Rameshore Khanal</strong></div>
<div style="text-align: right;">
	<strong>Former Finance Secretary</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;There are ample opportunities to promote specific districts with specific business focal points, like Dhading can be the organic district in order to access and expand the market of vegetables which covers the one-third of the Kathmandu market&hellip;.. Timely election being held, political class must rise to the occasion towards drawing a&nbsp;</span><span style="font-size: 14px;">Common Minimum Economic Agenda, towards which we from Nepal Inc are working.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>-Suraj Vaidya</strong></div>
<div style="text-align: right;">
	<strong>President, Federation of Nepalese Chambers of Commerce &amp; Industry</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;It&rsquo;s not just heritage and adventure, there are lot of scope in Nepal in terms of business and MICE tourism (Meeting, Incentive, Convention &amp; Exhibition).&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Amran Abdul Rahman</strong></div>
<div style="text-align: right;">
	<strong>Director, Malaysia Tourism</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Nepal can take a cue from Vibrant Gujarat Summit and its success in the economy of Gujarat, and can similarly bring in big ticket investments for hydro-power, infrastructure, manufacturing, tourism, agri-business and mines.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Sukanti Ghosh</strong></div>
<div style="text-align: right;">
	<strong>Managing Director (India), APCO Worldwide, USA</strong></div>
<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Nepal has more than half a century of planned economic development attempt. To achieve this target, we have to mechanise agriculture, commercial herbs, vegetables and fruits.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>-Binod Chaudhary</strong></div>
<div style="text-align: right;">
	<strong>President, Chaudhary Group</strong></div>
<div>
	&nbsp;</div>
<div>
	Where do we go from here? Future is pregnant with possibilities indeed.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Let&rsquo;s begin with the changing face of road network.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The Economic Survey of the Finance Ministry in 2013 says that more than 10,000 kms of roads are blacktopped, almost 6000 kms of road have been graveled, apart from nearly 8500 kms of earthen roads in Nepal. Except Humla and Dolpa, all other 73 districts have road access. The road connectivity with China has also added value to Nepal&rsquo;s economic sector. With the government trying to make the road investment strategy clear and long-term, there is enhanced interest of the private sector too in investing herein. The Public-Private-People Partnership driven Kathmandu-Kulekhani-Hetauda tunnel road is the signature evidence of this positivism.</div>
<div>
	&nbsp;</div>
<div>
	Coming to health and education, Nepal is on a positive direction to largely meet the Millennium Development Goals by 2015. Primary school enrolment has already crossed a whopping 95%, though at the secondary education level it is still one on three eligible children in education, in spite of some increase over the years. The latest infant mortality rate is at 9 per thousand live births, and maternal mortality rate has dropped to 229 per 100,000 live births, making the picture reasonably better than most South Asian neighbors. Significantly, nearly 4500 health institutions of various dimensions are providing health services to some 28 million people in this country. Nepal Living Standard Survey notes that one on four Nepalis today are below the poverty line, much better a situation than a decade or two ago.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Hydropower hopes have eluded the Himalayan nation for decades. Nepal&rsquo;s vast water resources are said to be next only to Brazil. However, till date Nepal is producing only 600 Megawatts of electricity whereas the known sources of hydropower can produce above 80,000 Megawatts, and it is still counting. This one sector alone can change the face of this nation. There are some clear signs towards progress. Upper Tamakoshi project with 456 Megawatts is progressing fast based on eco-friendly run-of-the-river model. Six other projects totaling around 240 Megawatts are also in progress. However, this sector needs clear and effective long-term policies, investment friendly environment and political stability.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The Agriculture sector has also taken a boost with 41 projec vts running on first priority and nine projects kept in second priority by the government, as listed by the National Planning Commission. These projects include special agriculture production program, co-operative farming, micro irrigation, livestock health service, agricultural research program, and others. The per hectare productivity today is around Rs.160,000, of the land available for agriculture and only 20 % is irrigated, and the average income of agriculture laborer has crossed Rs.70,000 per annum. Not the best of situations, but still no one dies of hunger in Nepal.</div>
<div>
	&nbsp;</div>
<div>
	In the manufacturing sector, the average growth rate per year over the last five years has been close to 2%. Production of food products, beverages, cigarettes, shoes, soaps, cement and plastic products have grown more than 3% per annum in this period. More than a thousand medium to large industries employing 300,000 of people function alongside more than a lac cottage and small industries with 600,000 people employed. Higher electricity and more and better roads can work miracles in this sector.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Finally, Tourism. It flourishes in tranquility. Civil war and political instability hitting tourism hard for some time in the past, Nepal is now witnessing positive signs with the total tourist arrivals in 2012 figuring 600,000 only by the air route! The average stay and spending per person per day are still low with less than 40 dollars a day spent by tourists. With 10 five star and 27 three and four star hotels, Nepal has a long way to go to tap the full potentials of tourism, which can be comparable to Malaysia or beyond.</div>
<div>
	&nbsp;</div>
<div>
	Yes, there is a long way to go for this beautiful nation of hardworking, patriotic and industrious people from the Mountains, Hills and the Terai-Madhesh, a nation where women have a better position in the society than many other South Asian nations in general in spite of poverty, a nation where youths work and study together in cities to earn economic independence, a nation where hugely diverse people live, work and enjoy each other&rsquo;s festivals together.</div>
<div>
	&nbsp;</div>
<div>
	The Nation awaits visionary statesman-like leadership ahead and the collective will of many to make a difference in the comity of nations.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The historic NewBiz Business Conclave and Awards is just the right step towards this direction: bringing to the fore the national economic priorities, trying to create a national consensus towards Common Minimum Economic Agenda, bringing forth the voices of business leaders and economists, and creating role models from among Nepal Inc in a nation where most political parties at least officially shun business and profits.</div>
<div>
	&nbsp;</div>
<div>
	Rightly did the NewBiz Chairman Madan Lamsal say at the onset of the awards ceremony, &ldquo;It is said that our work is our love made visible. This is indeed our labour of love. It is a historic moment to come to this point where New Business Age and Aarthik Abhiyan, the nation&rsquo;s leading business publications, salute the best performers in business who have been doing well in spite of economic challenges and political instability. And I congratulate each of the ten winners whom you will know in some moments from now one by one, in advance. We honor ourselves by honoring you. You have not done anything for awards, but for growth and development, to generate profits, employment, and welfare of a lot of people. You are our role models. A nation, yearning to grow, to be counted in the comity of nations, salute each of you for your extra ordinary achievement which will inspire the youth to dream and strive for more.&rdquo;</div>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p1%20(Copy)(1).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 283px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						Minister for Finance, Industries, Commerce and Supplies, Government of Nepal, Shankar Koirala along with Newbiz Chairman Madan Lamsal and other distinguished guests launched a book titled &mdash; Nepalko Arthik Briddhi Ek Margachitra (Sambriddha Nepal Abhiyan) during the Conclave &amp; Award ceremony at Soaltee Crowne Plaza.</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p2%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 443px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: center;">
						Invitees at registration desk of Newbiz Conclave &amp; Awards-2013</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p3%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 365px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						<div>
							Binod Chaudhary, President Chaudhary Group exchanging words with Professor Dinesh Chapagain and former finance minister Madhukar SJB Rana at Newbiz Conclave &amp; Awards-2013.</div>
					</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p4%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 285px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						Minister for Finance, Industries, Commerce and Supplies, Shankar Koirala along with Dr. Yuba Raj Khatiwada, Governor of Nepal Rastra Bank, Newbiz Chairman Madan Lamsal and moderator of the Conclave Achyut Wagle during the interactive session of the Conclave.</div>
				</div>
			</td>
		</tr>
	</tbody>
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			'content' => '<div>
	&nbsp;</div>
<div>
	What are the elements that shape the country&rsquo;s transition from volatile politics to stable democracy? All too often, policy analysts focus on the political process, while neglecting the vital role of economic reform in determining democratic success or failure.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In the last decade, high unemployment and lack of entrepreneurial opportunities posed serious challenges to Nepal&rsquo;s transition. On the other hand, the country faced growing unresolved grievances caused by issues such as misappropriation of private property, rampant corruption and widening inequality.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Yet, there is silver lining. Despite a decade-long political turmoil and armed conflict, the country&rsquo;s economy was successful enough to maintain its basic economic indicators in a positive direction. It is for sure that the country will go through a long and complex journey before the current political transition will settle to form a stable democracy. The question remains as to how to unleash economic prosperity in the current situation.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Many believe that the country can achieve prosperity if elections are held on time as political parties will agree on a common economic agenda to take the country into a prosperous future.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The government on July 14 announced the annual budget of Rs 517.24 billion for the Fiscal Year 2013-14 through an ordinance. This is the first time in two years that a government budget has been announced for the entire fiscal year before the fiscal year begins. The budget of the current fiscal year gives special emphasis on elections to the Constituent Assembly by earmarking Rs 16 billion to hold the CA election. The budget has also emphasised on sustainable development along with economic growth and stability.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The government is heading towards a dream of achieving the status of a &lsquo;developing country&rsquo; by 2022 through a three-year plan. Many suspect whether the Nepali economy can begin the journey of prosperity in the given circumstances. The experience of the last decade, however, shows that the country can achieve things if the CA election is held on time and if political parties are united on a common economic agenda.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Despite political instability, Nepal has witnessed a noticeable growth in all sectors during the last decade. In recent years, many banks and money transfer businesses have grown. Nepal was one of the highest receivers of remittance on the basis of the Gross Domestic Product (GDP) in 2011.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Between 1980-2012, Nepal&rsquo;s Human Development Index (HDI) rose by 3.8 percent annually from 0.234 to 0.463 today, which ranks the country 157 out of 187 countries with comparable data.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Nepal is one of the 189 countries committed to the Millennium Development Goals (MDGs), a pledge renewed in its three year plan (2010-2013). The data from MDG progress report for Nepal 2010 prepared in partnership between the government of Nepal and the UN country team indicates that Nepal may be able to achieve most of its MDG targets by 2015.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	There are noticeable improvements in other economic indicators too. The national poverty line has gone down to 25 percent, net enrollment rate has increased to 93.7 percent, under five mortality has reduced to 50 per 1000 live births and maternal mortality has reduced to 229 per 100,000 live births which is almost reduction by half in 10 years&rsquo; time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Be it the health and education sector or the manufacturing and industrial sector, the country has succeeded to achieve remarkable progress despite political instability during the last decade.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Improvements in health services have resulted in a decline in the mortality rate. The declining mortality rate coupled with high fertility rate has resulted in rapid population growth. Control of malaria and other epidemics and the expansion of medical and public health facilities also reduce morbidity and mortality in the country. School enrollments of both boys and girls at all levels have increased.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	There are rays of hope also in the hydropower sector too. Currently a power deficit country will be a power surplus one by 2018 if all ongoing projects will be completed within a stipulated time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Around a dozen of hydropower projects including 556 MW Upper Tamakoshi, 50 MW Upper Marsyngdi, 60 MW Trishuli 3A and 42 MW Upper Modi along with others are under construction. These projects are supposed to end existing massive power outage problem and lead the country into the era of industrialisation.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	During the conflict era, the tourism sector suffered a lot resulting in the closure of some renowned five-star hotels. The conflict also tarnished the image of the country in the global scene. However, the entire tourism sector has started to revive now and it is certainly no surprise that hotels have mushroomed in recent years. As the number of tourists and foreign business travelers in Nepal are growing in step with its economy, Nepal&rsquo;s rapidly maturing hotel industry is one of the key beneficiaries. The tourism sector has given much to the Nepali business community to cheer.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The total contribution of the travel and tourism sector to the GDP stood at RS. 119.1 billion in 2011, according to the World Travel and Tourism Council and was forecasted to rise by 4.8 percent in 2012 and by 4.1 percent per annum to NRP 185.5 by 2022.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Some of the road construction projects that are under the works raise hope in the realm of infrastructure development. Tripura Sundari to Satbanjha (25 km), Satbhanja to Gokuleshwar (54 km), Khodpe to Kalinga Bridge, Chainpur (62 km) are some major projects to connect rural Nepal by road access.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	These projects would lead to a 6 percent increase in the number of people with all-season road access and a 35 percent decrease in travel time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Educating and uplifting the status of the vulnerable and marginalised children, women empowerment through community-based livelihood enhancement projects is a tool to leap forward. Programmes of integrated rural development and nature conservation in the mountain region of Chitwan district is worth mentioning for steady rural reconstruction in Nepal.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Not only the telecom sector but also the entire Information and Communication Technology (ICT) sector has been witnessing a remarkable growth after the political revolution in 1990. Both growth and expansion of the ICT sector has lured many brands and companies to invest in the country. The monopoly of the state-owned Nepal Telecom has ended and many players have emerged in the telecom and ICT business.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Today, all districts of the country have telecom facilities and consumers are using state-of-art technology and sophisticated devices to prove themselves tech-savvy. The government and private sectors are mulling to utilise ICT to boost the economy by using its maximum potential to promote all sectors.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In recent years, the agricultural sector has also gained attention from the government as well as the private sector. The government&rsquo;s plan to modernise agriculture, ease the distribution of chemical fertilizers, step up the construction of irrigation projects would at least decrease the country&rsquo;s dependency on import for the agro-products, making the country self-reliant.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Green Kathmandu, Clean Bagmati campaign will lift the face of the river flowing through the capital. The Melamchi Drinking Water Project will solve the problem of acute shortage of water in the Kathmandu valley.&nbsp;</div>
<div>
	It is always said that the youth are not just leaders of tomorrow but partners of today.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The population of youth between the age of 15 and 29 is 6.131 million in Nepal. This accounts for 26.5 percent of the total population. Consolidating youth for prosperous development should be the main responsibility of the state, private sectors, and civil society.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The nation should take advantage of young talent and energy, simultaneously solving problems of violence, instability and abusive behaviour. Considering these facts, it is necessary to invest energy and capacity embodied in the youngsters in a constructive way for the development of our country by making the rural youth competent and responsible.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Since we are going through a post conflict period, the state machinery should not neglect this mass. The government should come up with a plan to engage these large numbers of youth in creative and entrepreneurial ventures. This is the need of hour of our country. Also, it is the only way to enhance our youth with their energy and efforts.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In a country like Nepal, real development Let us dream together that one day the rural youth of Nepal will be able to lead not only the development process but also play a vital role in the economic, cultural and political sectors.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	As in an essay by noted litterateur Laxmi Prasad Devkota entitled &lsquo;Is Nepal Insignificant?&rsquo; where he eloquently writes about the prospects of Nepal, this country has tremendous potential for economic growth. But all we need to boost the country&rsquo;s economy are commitment from the political leadership, positive thinking of the general public and sincere and genuine efforts from the private sector.</div>
<div>
	&nbsp;</div>',
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			'created' => '2013-08-23',
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			'description' => 'In an ideal situation, we have hopes of becoming Switzerland. In reality, our conversation begins with negative news. It seems Nepalis are very enthusiastic to change the country but put in little effort for their own part',
			'sortorder' => '1545',
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		'Article' => array(
			'id' => '1446',
			'article_category_id' => '40',
			'title' => 'Towards Inclusive Growth',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size: 12px;">It was India&rsquo;s Montek Ahluwalia who coined the phrase &lsquo;inclusive growth&rdquo; in the 1970s with the World Bank (WB) Report &ldquo;Redistribution with Growth&rdquo;; and later it was reckoned that $ 1 per day (currently $ 1.25 per day) as being the line of absolute poverty which had to be traversed to be pro-poor and &lsquo;inclusive&rsquo;.&nbsp;</span></div>
<div>
	&nbsp;</div>
<div>
	Whereas Marx wanted &ldquo;forced redistribution&rdquo; of assets of the feudal and bourgeois classes for inclusion, Ahluwalia wanted redistribution through legal, monetary and fiscal interventions. The problem with both was that, as socialists, the concept lacked faith in the middle class as the true vanguards of democracy-- and the private sector as the true engineers of efficient and rapid economic growth and employment creation.</div>
<div>
	&nbsp;</div>
<div>
	And so this $ 1 a day &lsquo;absolute poverty&rsquo; thesis of Montek Ahluwalia gave birth to the Human Development thesis of Pakistan&rsquo;s Mahbul Haq, which basically sought &lsquo;inclusion&rsquo; by creating equality of opportunities for all those excluded, especially women and the girl child.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Haq pioneered the human capital revolution which got us to think of creativity and productivity as the true source of prosperity and human welfare and not the usual underscoring of the importance of natural, physical or financial capital. He got us to think of people as more than just labour. And he made them the centerpiece of development.</div>
<div>
	<img alt="" src="/userfiles/images/cs1.jpg" style="float: left; margin: 0px 10px 0px 0px; width: 220px; height: 328px;" /></div>
<div>
	The Human Development Index is his lasting legacy. Haq learnt from the experience of Pakistan in the 1960s that one could have 7% GDP growth and also suffer acute inequalities and inequities to exclude the poor from the fruits of growth&mdash;and worse, exclude 50% of the population of women who needed to be empowered by the State. He also re-introduced the concept of &lsquo;human security&rsquo; which was the foundation on which the Japanese economic miracle of the 1950s-70s occurred with little or no natural resources.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&lsquo;Growth&rsquo; and &lsquo;development&rsquo; are related but different concepts. Growth theories apply to developed nations whereas development theories apply to underdeveloped nations mired in hunger, malnutrition, illiteracy, ill health, superstition, deprivation, exploitation and underemployment of human resources.</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth also refers to the need for a &lsquo;balanced growth&rsquo; between (a) agriculture and manufacturing and (b) urban and rural areas of a nation. Thus inter &ndash;industry analysis and input-output models were developed and regional economics became a separate discipline to deal with geographic inequalities in growth. (As early as the 1970s Centre for Economic Development and Administration (CEDA) under Tribhuvan University, intellectually led by the likes of Dr Harka B Gurung and Dr Ratna SJB Rana were doing such seminal work for Nepal for regional balance by examining possible growth centres and corridors, which was waylaid by foreign aid that opted for extraneous models of development. This eventually sowed the seeds of conflict in Nepal with its over-emphasis on the role of the central bureaucracy and a Kathmandu-centric model of development. I am referring to the failed Integrated Development Projects (IRDPs) of the World Bank and the several bilateral donors working in isolation of each other to practically make the central bureaucracy their own dysfunctional and corrupt fiefdoms. It failed because it was costly and opted for decentralization rather than devolution with bottom up local leadership development with people&rsquo;s participation).</div>
<div>
	&nbsp;</div>
<div>
	In the 1980s, a new growth and development paradigm was born-- &lsquo;sustainable growth&rsquo;. It was felt that the cost to the natural environment was not being factored in by the GDP approach as the very success of growth resulted in externalities such as environment degradation, pollution of air, soil, water&mdash;one may say, development&rsquo;s impact was toxic. For most of the time, growth theory was driven by concern for its pace and pattern of growth. Then comes concern for its impact on Nature. And thus was added a new dimension to &lsquo;inclusion&rsquo; theory.&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs2.jpg" style="float: right; margin: 0px 0px 0px 10px; width: 352px; height: 175px;" /></div>
<div>
	In the 1990&rsquo;s, led by Nepal&rsquo;s Gandhian statesman PM Krishna Prasad Bhattarai, a new concept was bestowed to the development paradigm. &lsquo;Pro-poor growth&rsquo; was the term coined by the SAARC Independent Commissioners in 1992 (see the SAARC Secretariat Report: &ldquo;Meeing the Challenge) as it began to grapple with growth models that tended to &lsquo;walk on one foot&rsquo;, as it were. Thus it emphasized Structural and Extended Structural Adjustment Programmes (SAP and ESAP) passionately underwritten by the International Monetary Fund (IMF) and the World Bank in tandem to usher economic and financial reforms since the 1980s.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The SAP and E-SAP model of growth and development ignored the contribution that the poor, especially women, could make to growth by treating them as objects of development and not the subjects. Hence the call for &lsquo;pro-poor growth&rsquo; with Organizations of the Poor to be engaged in self help, self development and self management by designing locally based growth and development models unique to its social, cultural and ecological environments. For this to happen, it called for Social Mobilization of the Poor by the State so that they can participate in development and democracy through the mechanism of the Market. It believed that South Asia could have 9% GDP growth with 3% being contributed by the poor themselves, if it followed a strategy of walking on two legs &ndash; (a) priority to agriculture (b) development of labour intensive SMEs in manufacturing (c) human development and human security (d) social mobilization of the poor to create Organizations of the Poor to pursue their own models of growth and at their own pace as also to countervail the power of the ruling and rural elites. Its lasting contribution is the inclusion of &lsquo;social capital&rsquo; as a viable and relevant development model where the local culture should be included, and seen as an enduring asset, along with the traditional local institutions in the form of Community-based Organisations (CBOs) and TVOs. (Alas, the NGOs, sadly, were trying to make them irrelevant being driven by extraneous social and political forces under the banner of universal human rights )&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs3.jpg" style="width: 525px; height: 175px; margin: 10px 25px;" /></div>
<div>
	&nbsp;</div>
<div>
	<strong>Development through Devolution (The Alternative Model for 2015-20)&nbsp;</strong></div>
<div>
	&nbsp;</div>
<div>
	It is unlikely that a top-down driven development paradigm comprising national planning, state enterprises, labour unions &hellip; will allow inclusion of all. This can only happen when opportunities are created for all by supporting markets garnished by agrarian, economic, financial, administrative and labour reforms. Not least maximizing a bottom up development paradigm with maximum scope for local leadership development and culture-specific innovations to achieve MDGs goals and targets by the locals themselves in tune with their own capacity to deliver. This requires that the national think tanks adopt more than Chamber&rsquo;s Participatory Research Approach (PRA) for Participatory Action Research (PAR) as underlined by the SAARC Independent Commission on Poverty Alleviation of 1992.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth must mean growth with productive employment by creating opportunities for jobs and by investing in one&rsquo;s human capital development of own self and family members for the jobs --in the context of globalization The primary focus of inclusive growth must be on quality of human capital and so needs inclusion of Private Sector as the engine of growth since they create jobs for employees and opportunities for the self-employed.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Planning must be macro, meso and micro, all harmonized strategically. The Macro Plan must project the desired structure of the economy for the next 25 years and the five year plan must be a human resource development plan that addresses the human capital requirements for the perspective economy of the future (say 2035) based on manpower supply and demand projections and plans judiciously integrated with the educational plan that opens avenues for vocational, apprenticeship, technical and technological for the variety of occupations in the national economy and in the global labour markets.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In other words, the State will have 5 Five Year Rolling Macro Plans that will be supplemented by Meso Plans to strategically manage education, health, gender, children, youth, old age, disabled, castes and creeds, urbanization, water, energy, ICT, transportation, investment, saving, capital markets, credit flows, exports, imports, taxation, and also corporate governance, entrepreneurship development, R &amp;D; S&amp;T, and monopoly regulation, for example, depending on the number of Ministries to be created. The fewer the Ministries the better. Let us emphasize that these ministries must move towards being a &lsquo;managerial civil service&rsquo; (as happened in East Asia to turn their economies into Tigers) and not continue to function as the colonial &lsquo;administrative civil service&rsquo; mired in red tape and acutely devoid of horizontal communication and coordination.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Competition is the name of the game and with it goes merit &ndash;not reservations. Hence private sector must seek to gather the &lsquo;fortune at the bottom of the pyramid&rsquo; as part of their core business strategies. And SMEs and Micro Enterprises and Social Entrepreneurs are vital actors in the formulation and execution of the national and sector plans, as well as the creation of urban clusters and supply chains.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive growth requires that we take in a host of factors and forces like geography, demography, social factors and forces, governance etc and hence has to be participative to require decisions at all levels and all actors &ndash;not just the state guided by the NPC with its very weak basic and applied research capacities coupled with rapid turnover of planners with the political changes. Such NPCs are a waste of national resources and should be converted to an Advisory Economic Council with the Prime Minister Office (PMO), if they are genuinely needed. What is now needed is Integrated Sector Programming and National Performance Budgets governed by a Fiscal Management and Responsibility Act as exists, for example, in South Korea and India.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth is growth that benefits each and every segment of a society with no exclusions whatever. This means when women&rsquo;s work at home they be paid for and their contribution to the GDP be duly recognized and rewarded.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Nepal&rsquo;s development plan has to be framed in the perspective of the opportunities from India, China and Bangladesh in due cognizance of our economic structure and development constraints. It requires our policy planners and private sector to be proactively engaged in national and sector dialogues with each other: to set down targets and outcomes for coordinated policy and designing of sector and multi sector programmes aligned with the annual performance budgets. We have to assess feasible economic growth targets for each 5 yr periods first and foremost in consensus with the political parties&mdash;and not be driven by external agents and fanciful notions of the political leadership who are very, very weak in their understanding of economics and finance.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	We have to set achievable GDP and sector targets and act accordingly to secure them jointly with the local governments, NGOs and private sector Each target must be supported by country-wide action plan and programme. For example (a) eradication of illiteracy (b) raising GDP by 5.5% (c) agri growth at 4.0% (d) inflation down to 7.5% (e) industrial growth by 10% -- devolved to districts with their own targets set locally (f) lower capital output ratio through more efficient planning, choice of foreign aid and eradication of graft and corruption; ICT for better governance (g) gender budget for gender inclusion to name a few development agenda topics.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Immense macro economic benefits have accrued from remittances which is now 25% of GDP. It has helped reduce poverty from 42% (1996) to 24% (2012). It has prevented Nepal from economic collapse and stabilized economic growth at the midterm growth rate of around 3.5- 4% between 2005-13.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Yes, costs have been borne at the household and individual levels with the pain and suffering of international migration and debts incurred for it. However, one can take advantage from the challenges by planning the remittance economy better so as to empower women head of household and the girl child with the skills to fill in the job vacancies as happened during WWI ad WW II that liberated women once in for all in the West.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs4.jpg" style="width: 525px; height: 175px;" /></div>
<div>
	&nbsp;</div>
<div>
	<strong>Conclusions&nbsp;</strong></div>
<div>
	&nbsp;</div>
<div>
	South Asian concept of Inclusiveness is this: all growth and development models must be ingrained in our civilizational heritage&mdash;not that of the Greeks, Romans or Christians or Marx and Mao. Inclusiveness should be based on one&rsquo;s culture adapted for internally to achieve modernity and based on pragmatism for the greatest public good. It seeks to be grounded not on a Capitalist or Socialist Society with all its ideological baggage but on a Humane Society where Planet Earth is a Global Village embodied and enriched by pluralistic cultures and cosmopolitan individuals with multiple identities with equal value, as was bestowed upon us by the eternal wisdom of Swami Vivekanada.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth and Development are super structure means to an end that needs to be holistically entrenched with sound social, economic, ecological and political structures that are themselves inclusive. Let us summarize the parameters and their variables here below:&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(A) Inclusive Society: formalization of CBOs, organization of the poor, social mobilization, preservation and promotion of multiple identity; maximum role for the social organizations; protects and promotes the joint family system rather than the state acting as nanny and nurse and creates a Commonwealth of Plural Societies with various civil society organizations &ndash;and their national federations-- to represent professional, business, religious, gender and cultural interests;&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(B) Inclusive Economy: access to credit for all; entrepreneurship development; traditional skill development; community ownership of resources; markets that respect consumer and ecological sovereignties;&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(C) Inclusive Environment: harmonious nature-people relationships in the context of global warming and climate change , and</div>
<div>
	&nbsp;</div>
<div>
	(D) Inclusive Polity: direct democracy; inclusive institutions &ndash;education, health, access to justice; rule of law; community leadership; empowerment of gram panchayats; modernity through local leadership and local culture ; proportional representation of communities and gender in all political parties for inclusive governance and political leadership and political space to duly elected civil society federations to be represented rotationally in the Upper House of Parliament so that short run political interests are countervailed by long-run non political civil society interests.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Finally, given all the above parameters and their variables for inclusion there is really no need for an ethnic-based Inclusive State to render justice to all and the next generations. Yes, we need an Inclusive Constitution to not exclude any. Primarily, to ensure the supremacy of the Constitution and the rule of law by having independent institutions to check the abuse of power by the political authority and guarantee accountability, transparency, competition and merit in the body politic for the larger public good.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	I submit, we do not even need a federal state. Much wiser to devolve responsibility to the 4440 VDC and 75 Districts and Municipalities for dynamic and harmonious Inclusive Growth and Development of an independent and sovereign Nepal with its territorial integrity intact.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<em><span style="font-size:11px;">(Rana is Professor South Asian Institute of Management (SAIM) and Former Finance Minister.)</span></em></div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs5.jpg" style="width: 525px; height: 175px; margin: 5px 25px;" /></div>
<div>
	&nbsp;</div>',
			'published' => true,
			'created' => '2013-07-19',
			'modified' => '2013-07-21',
			'keywords' => 'new business age cover story news & articles, cover story news & articles from new business age nepal, cover story headlines from nepal,  current and latest cover story news from nepal, economic news from nepal, nepali cover story economic news and events,  ongoing  cover story news of nepal',
			'description' => 'It is a la mode, these days, to speak of ‘inclusive growth’ and ‘inclusive development’. In Nepal’s case, the Maoists have extended it to ‘inclusive State’: and with it the constitutional and political contours of new Nepal are yet unclear—and remain extremely contentions.',
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	(int) 3 => array(
		'Article' => array(
			'id' => '1077',
			'article_category_id' => '40',
			'title' => 'Nepali Banking In Transition Through Mergers And IPOs',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p>
	<strong>By Siromani Dhungana (with inputs from Yagya Banjade and Rashesh Vaidya)</strong></p>
<p>
	<em>As per the NRB’s latest data, the country has 31 commercial banks, 87 development banks, 80 financial companies and 21 micro-finance companies. The number shows that there is tough competition among banks and financial institutions (BFIs) forcing them to face multiple challenges. The major one is surely the capital base. The introduction of merger policy has created opportunities for banks to increase their capital base. At the same time, the BFIs are also going ahead with Initial Public Offerings (IPOs) to increase their capital base. In this issue, New Business Age tries to present an overview of how the Nepali banking sector is going about with mergers and IPOs.</em></p>
<p>
	The trend of announcing merger plans by the banks and financial institutions (BFIs) has gathered pace in recent months. According to Nepal Rastra Bank, a total of 28 banks and financial institutions (BFIs) have already merged with each other reducing the total number of BFIs by 15. Similarly, some 24 BFIs have already received Letter of Intent (LoI) to be merged with one other, and upon completion of this process, the total number of BFIs will reduce by another 14. And, other 12 BFIs have applied for the LoI. Once these too complete the process, the number of BFIs will be reduced by additional 5.</p>
<p>
	This shows that in spite of several weaknesses to implement monetary policy, Nepal Rastra Bank (NRB) has become quite successful in implementing its merger policy. Earlier, the central bank had announced packages of rebates, discounts, waivers and facilities to the BFIs opting for mergers. But now, the bankers themselves believe that merger has become compulsory for many banks which are suffering from the problem of low capital base and limited geographical coverage.</p>
<p>
	Similarly, a wave of Initial Public Offerings (IPOs) has started among the new BFIs. In the last Nepali calendar year that ended on mid-April, 20 BFIs issued IPOs, issuing shares worth Rs 5.6 billion. More offering such IPOs are in the pipeline. Though BFIs can increase their capital base also through Further Public Offering (FPO) of their shares, very few of them have opted for this route.</p>
<p>
	<strong>Need for Merger</strong></p>
<p>
	Apparently, the universal objectives of the merger or acquisition are to consolidate the capital, reduce operational expenses, expand business and maximise profits.&nbsp;</p>
<p>
	However, in our case, mergers of three distinct natures now seem to be in the offing.&nbsp;</p>
<p>
	Firstly, relatively large institutions are planning to create a larger capital base so they could compete with global players who could potentially begin their operations here owing to WTO arrangements.&nbsp;</p>
<p>
	The second type of merger would be compulsive of sorts as the NRB has asked the BFIs belonging to the same business house to integrate without any “ifs and buts’’.&nbsp;</p>
<p>
	The third types are those who fear the complete meltdown if they fail to merge soon to consolidate resources, introduce corporate best practices and reduce expenses.&nbsp;</p>
<p>
	Consolidation is becoming increasingly necessary as banks are struggling to give returns to their shareholders. Almost all BFIs are eyeing mergers, and the number of BFIs will come down notably in the next three years.</p>
<p>
	However, bankers say more incentives are needed to speed up mergers, particularly between commercial banks. For example, they have been demanding decrease in corporate income tax to 20 percent from the current 30 percent for a merged BFI.</p>
<p>
	As there is no environment for increasing capital by issuing rights shares and bonus shares as that will not be enough to raise capital to the required level, finance companies have no other&nbsp;option than to go for a merger. Many finance companies have thought that’s it’s better to opt for a merger than to face action from the central bank for failing to increase the capital to the required level next year.</p>
<p>
	Also the shaken public confidence on towards banking institutions due to recent problems in the banking sector and their inability to give proper returns to their shareholders, has forced the BFIs to increasingly lean towards consolidation.&nbsp;</p>
<p>
	Consolidation is necessary also to increase the paid-up capital since the possibility to increase of paid up capital by issuing rights shares is very slim. Moreover, the size of loans being demanded by single borrowers has been increasing in recent years. So, BFIs having low paid-up capital cannot fulfill such demand.&nbsp;</p>
<p>
	Similarly, merger becomes an urgent need also because due to the terms agreed by Nepal while gaining membership of World Trade Organisation (WTO), financail services sector is open for foreign investors beginning 2010. So, foreign banks can open their branch in nepal. If big foreign banks open their branches in Nepal, the Nepali banks with small capital base may not be competitive.</p>
<p>
	<strong style="font-size: 12px;"><span style="font-size: 12px;"><br />
	</span></strong></p>
<p>
	<strong style="font-size: 12px;"><span style="font-size: 12px;">The Journey of BFIs Mergers in Nepal So Far</span></strong></p>
<p>
	The journey of merger of Nepali banks began nine years back. In 2004, Laxmi Bank merged into it Himalayan Saving and Finance Company (HISEF), and it was done according to the broad provisions of Company Act and Bank and Financial Institution Act (BAFIA). The then Narayani Finance and National Finance had merged to become Narayani National Finance following the same Acts. Similarly, Himchuli Development Bank and Birgunj Finance merged and became H &amp; B Development Bank aalso merged under the same act.</p>
<p>
	That experience highlighted a need for special rules to govern this process. But was only in May 2011 that Nepal Rastra Bank came up with a special rule to facilitate mergers between BFIs.</p>
<p>
	When Nepal Rastra Bank (NRB) introduced the Merger By-laws in May 2011, many had still doubted whether Nepali banks and financial institutions (BFIs) would go for mergers as the concept was a relatively new for the country. &nbsp;That doubt seemed valid for some time. But soon a merger spree started among BFIs. Birgunj Finance and Himchuli Bikas Bank sought LoI from NRB in 2004 and completed their merger the same year becoming H&amp;B Development Bank. The process gained memorandum after that. (See box for the list of BFIs merged so far.)</p>
<p>
	<img alt="Nepal Rastra Bank" height="345" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_nrb.jpg" style="margin: 0 10px 0 0;" width="595" /></p>
<p>
	As the list on the box shows, most of the BFIs that have chosen to merge are development banks and finance companies merging with another institution of same category or with a commercial bank. However, latelycommercial banks too have started merging with another commercial bank. The recent such example is the merger process started by Bank of Asia Nepal and Nepal Industrial and Commercial Bank Limited.</p>
<p>
	<strong>Major Provisions of Merger By-Law</strong></p>
<ol>
	<li>
		<strong>‘A’, ‘B’ and ‘C’ class financial institutions can merge into each other. ‘D’ class FI can merge with another ‘D’ class FI only.<br />
		</strong></li>
	<li>
		<strong>FIs that want to merge should form a separate merger committee and sign Memorandum of Understanding (MoU).<br />
		</strong></li>
	<li>
		<strong>The due process including MoU should be completed before applying to the Nepal Rastra Bank (NRB)for Letter of Intent (LoI). NRB should hold a meeting within 15 days of receiving LoI application.<br />
		</strong></li>
	<li>
		<strong>NRB decides whether to issue LoI or not after conducting discussions and detailed study of concerned institutions.<br />
		</strong></li>
	<li>
		<strong>Due Diligence Audit should complete within six months of receiving LoI from the central bank.<br />
		</strong></li>
	<li>
		<strong>The detailed factual report comprising assets and liabilities of concerned institutions should be submitted to the NRB.<br />
		</strong></li>
	<li>
		<strong>Copy of the decision regarding name, address and share ratio of concerned financial institutions should be submitted to NRB.<br />
		</strong></li>
	<li>
		<strong>Action plan of concerned financial institution including date of operation after merger process is completed should be submitted to NRB.<br />
		</strong></li>
	<li>
		<strong><span style="font-size: 12px;">Other documents as prescribed by the NRB should be submitted to NRB.</span><br />
		</strong></li>
</ol>
<p>
	<strong><span style="font-size: 12px;">NRB can ask for merger if the following situation prevails:</span></strong></p>
<ol>
	<li>
		<strong>In case representatives of a family, business group, firm or company are found assuming posts in the boards of directors of two or more BFIs and/or their financial conditions remain unhealthy.</strong></li>
	<li>
		<strong>If the non-performing loans (NPL) exceeded 5 percent of the total loan portfolio for 3 consecutive years.&nbsp;</strong></li>
	<li>
		<strong>Increase in systematic risk (i.e. in a situation when a BFI seems likely to fail to meet liabilities).</strong></li>
	<li>
		<strong>If independent operation of a BFI is causing negative impact on the banking system.</strong></li>
	<li>
		<strong>If a BFI faces prompt corrective action (PCA) for three times or more.</strong></li>
	<li>
		<strong>If NRB finds that merger of systemically important BFIs will strengthen the entire banking system.</strong></li>
</ol>
<p>
	<strong>Facilities for Merger</strong></p>
<p>
	The new regulations have pledged relaxation on provisions for capital structure, shareholding limit for promoters, credit-deposit ratio, borrowings limit for promoters and deprived sector lending, among others.</p>
<p>
	If the merger causes increase in the shareholding percentage of any promoter beyond the stipulated limit, such promoters get five years time to bring down their stake within the limit.</p>
<p>
	Likewise, merged institutions are allowed additional three years to bring CD ratio down to the of 80 percent. Similarly, promoters get additional three years to bring their borrowing (loans) down to less than 50 percent of the total shares they hold in the merged BFI.</p>
<p>
	In a bid to lure BFIs to merger, the central bank has even promised a discount in refinance rate by one percentage point to the merged institution. It has also offered to lower penal rate on standing liquidity facility by half for three years in case two or more BFIs merged into one.</p>
<p>
	The central bank has also opened upgrading of &nbsp;fianancial institutions relaxed the restriction on upgrading of a BFI to encourage merger. A BFI can upgrade to higher category (category ‘C’ to ‘B’ and from ‘B’ to ‘A’) if the institution seeking to upgrade is formed through a merger).</p>
<p>
	The rules also promise to recommend to the government for exemption of taxes in case a BFI faces losses during the course of merger facilities include the time duration of using SLF will be expanded to 30 days from the existing 5 days for three years after completion of merger process. NRB can provide other facilities according to the need of the banks.&nbsp;</p>
<p>
	<strong>Challenges of Transition</strong></p>
<p>
	Most of the consumers do not get sense of transition of banks merger because in an ideal case, all banking services continue to function normally even during the transition. ATM cards work, checks consumers write do not bounce and consumers will be able to get the all services.&nbsp;</p>
<p>
	&nbsp;However, banks face several problems during the transition. Among others major challenges of merger are as mentioned below:</p>
<p>
	<strong>1. Brand Name</strong></p>
<p>
	The identity of the institution in the market is through the brand name. The image of an entity is joining with a brand image. So, the settlement in the brand name of the newly formed merged entity is essential.</p>
<p>
	<strong>2. Composition of board of directors (BoD) and shareholders</strong></p>
<p>
	The major decision makers in any entity are the board of directors and the shareholders. If the disputes arise among these people, the performance as well as the future of the entity will be directly hampered. So, the number as well as the persons that should represent at the BoD should be settled in cool mind.</p>
<p>
	<strong>3. Structure of the new management team</strong></p>
<p>
	The new merged entity comprises of the management team from two or more different entities. So, clear visions should be set-up for making the new management team which could handle the merged organization in coming days.</p>
<p>
	<strong>4. Employees Management</strong></p>
<p>
	As the organization is merged, at the same time the employees also come together. The major assets any organization is human resources. So, if the merged entity can not handle properly the grievances of the employees, the situation of disputes may arise. &nbsp;</p>
<p>
	<strong>5. Ownership Division</strong></p>
<p>
	The problem of division among the ownership might arise in the merged entity. The questions of shareholding as well as takeover of the share equity might create division among the shareholders. &nbsp;</p>
<p>
	<strong>6. Banking Software</strong></p>
<p>
	Various types of software are being used by the BFIs for the smooth operation. Huge cost and efforts had been gone in maintain the software in an organization. But if the two different entities are using two different types of banking software, the problem as well as cost may arise in the settlement of the books of accounts.</p>
<p>
	 </p>
<p>
	<strong>Need of Separate Acquisition Law</strong></p>
<p>
	Acquisition is, however, yet to come under the legal regime in the country. The central bank has said that it has been doing necessary preparations to introduce a separate legal mechanism on acquisition to encourage consolidation of the financial sector. Acquisition of financial institutions is difficult at present since there is no related legal provision, says CEO of Kailash Bikas Bank Krishna Raj Lamichhane who is also the president of Development Bankers Association.</p>
<p>
	NRB officials say that about half a dozen banks had held talks with the central bank about the possibility of acquiring regional development banks and finance companies to reach out to new areas. Acquisition is a relatively faster process as the challenges of merger such as it can be done once the buyer and the seller reach an agreement. Bankers say the introduction of legal provisions for acquisition will help bring down the number of BFIs in the country. The central bank needs to be careful while issuing new licenses and also the ability for smaller banks to withstand the economic crisis.</p>
<p>
	<strong>IPO Attraction</strong></p>
<p>
	The Nepali investors have been showing very encouraging response to the IPO of the company, especially of commercial banks. The data of Securities Board of Nepal (Sebon) reveals that 22 companies have got approval for the IPO from mid July 2012 to till the mid May of 2013. Shares worth of Rs 5.78 billion came in the market during this period. Of the total 22 companies, eight development banks, eight commercial banks, three finance companies, one insurance company and one hydro-power company.</p>
<p>
	<strong>The Direction Ahead</strong></p>
<p>
	The foremost challenge to the country’s banking sector in the realm of merger of banks is to create an environment where major financial institutions will go for merger voluntarily, says Upendra Paudyal, vice-president of Nepal Bankers Association (NBA).</p>
<p>
	The overall financial health of merged institutions has been found to be improved so far, he opines, saying the primary intention of the merger should be to strengthen capacity of concerned banks and financial institutions.&nbsp;</p>
<p>
	The policy taken by the Nepal Rastra Bank has resulted in positive signs since the market players in the arena of banks and financial institutions have saturated, adds Paudyal says. “Merger bylaws have played very crucial role in lowering the number of BFIs.”&nbsp;</p>
<p>
	But there is a question about the way forward of merger in the banking sector. The mathematical aspect has been highlighted so far by both the government and the BFIs, Paudyal says. It is cultural aspect which largely determines the success of merger. Sincere effort from all concerned parties is a must to make a merger journey a great success in the counry, he concludes.</p>
<p>
	&nbsp;&nbsp;</p>
<hr />
<p>
	<strong>In Nutshell</strong></p>
<p>
	The first case of merger between BFIs in Nepal was the merger of HISEF Finance Ltd into Laxmi Bank Ltd in 2004</p>
<p>
	<strong>BFIs that have merged already</strong></p>
<ul>
	<li>
		Himchuli Development Bank &amp; Birgunj Finance forming H&amp;B Development Bank Ltd</li>
	<li>
		Narayani Finance &amp; National Finance forming Narayani National Finance</li>
	<li>
		Nepal Bangladesh Bank &amp; Nepal-Sri Lanka Merchant Bank forming Nepal Bangladesh Bank Ltd</li>
	<li>
		Kasthamandap Development Bank &amp; Shikhar Finance forming Kasthamandap Development Bank Ltd</li>
	<li>
		Business Development Bank &amp; Universal Finance forming Business Universal Development Bank Ltd</li>
	<li>
		Machhapuchchhre Bank &amp; Standard Finance forming Machhapuchchhre Bank Ltd</li>
	<li>
		Global Bank &amp; IME Financial Institution &amp; Lord Buddha Finance forming Global IME Bank Ltd</li>
	<li>
		Infrastructure Development Bank &amp; Swastik Merchant Finance forming Infrastructure Development Bank Ltd</li>
	<li>
		Annapurna Development Bank &amp; Suryadarshan Finance forming Supreme Development Bank Ltd</li>
	<li>
		Vibor Bikas Bank &amp; Bhajuratna Finance forming Vibor Bikas Bank Ltd</li>
	<li>
		Alpic Everest Finance &amp; Butwal Finance &amp; CMB Finance forming Synergy Finance Co Ltd</li>
	<li>
		Shine Development Bank &amp; Resunga Development Bank forming Shine Resunga Development Bank</li>
	<li>
		Pashupati Development Bank &amp; Udyam Development Bank forming Axis Development Bank Ltd</li>
	<li>
		Prudential Finance &amp; Gorkha Finance forming Prudential Finance Company Ltd</li>
	<li>
		NIC Bank &amp; Bank of Asia forming NIC Asia Bank Ltd (Process ongoing)</li>
</ul>
<p>
	<strong>Letter of Intent (LoI) Received &nbsp; &nbsp;&nbsp;</strong></p>
<ul>
	<li>
		Premier Finance &amp; Imperial Finance to form Premier Imperial Finance</li>
	<li>
		Royal Merchant Banking and Finance, Rara Bikas Bank &amp; Api Finance</li>
	<li>
		Araniko Development Bank &amp; Surya Development Bank</li>
	<li>
		Central Finance Ltd &amp; Patan Finance Ltd</li>
	<li>
		Diyalo Bikas Bank Ltd &amp; Professional Bikas Bank Ltd</li>
	<li>
		NDEP Development Bank &amp; Hama Finance Ltd</li>
	<li>
		Siddhatha Development Bank &amp; Public Development Bank Ltd</li>
	<li>
		Five Regional Development Bank to form One National Level Gramin Bikas Bank</li>
	<li>
		Shangrila Development Bank Ltd &amp; Bagheshwor Development Bank</li>
</ul>
<p>
	<strong>LoI In Pipeline&nbsp;</strong></p>
<ul>
	<li>
		Lalitpur Finance Ltd &nbsp;&amp; Progressive Finance Ltd</li>
	<li>
		Sagarmatha Merchant and Finance Ltd &nbsp;&amp; Reliance Finance Ltd</li>
	<li>
		Social Development Bank &amp; Corporate Development Bank</li>
	<li>
		Vibor Bikas Bank &amp; Kist Bank Ltd</li>
	<li>
		Manakamana Development Bank Ltd, Infrastructure Development Bank, Yeti Finance Limited &amp; Valley Finance Ltd.&nbsp;</li>
	<li>
		Khadbari Bikas Bank &amp; Birat Laxmi Finance</li>
	<li>
		Global IME Bank &amp; Social Development Bank Ltd.</li>
</ul>
<p>
	<strong>Merger Process Dumped</strong></p>
<ul>
	<li>
		Kathmandu Finance Ltd &amp; Civil Merchant Bittiya Sanstha Ltd</li>
</ul>
<div>
	<hr />
</div>
<p>
	<strong><span style="font-size: 12px;">Financial Indicators of the Merged Entities</span></strong></p>
<div>
	<p>
		The major financial indicators of the merged entities have slightly improved compared to the pre-merger situation.&nbsp;</p>
	<p>
		Machhapuchhre Bank Ltd (MBL) had a higher level of non-performing loan (NPL) before merger than of the Standard Finance Limited (SFL). The NPL of MBL was at 2.84 percent whereas; the NPL of SFL was at 0.73 percent. After the merger, the NPL of MBL stood at 2.73 percent according to the financial report for mid-July 2012.</p>
	<p>
		The Credit Deposit (CD) Ratio of SFL was very high at 104.27 percent whereas, the ratio was at good level at 74.62 percent for MBL before merger. &nbsp;After the merger the CD ratio of MBL was maintained at 73.07 &nbsp; percent. But the Return on Assets (ROA) declined below one percent.</p>
	<p>
		&nbsp;Among the three merged entities in Global IME Bank Ltd, the financial performance of Lord Buddha Finance Ltd was not good. Its Capital Adequacy Ratio (CAR) was very high at 33.76 percent. &nbsp;Similarly, the NPL and ROA of the finance company were at 3.99 percent and -0.61 percent respectively. The NPL of merged entity, Global IME Bank Ltd stands at 1.54 percent as of the third quarter report of the FY 2012-13. At the same time the ROA is at 1.13 percent.</p>
	<p>
		Similarly, in Vibor Bikas Bank after merger of Bhajuratna Finance &amp; Saving Co. Ltd. has a high level of CAR at 14.42 percent but at the same time the level of NPL has increased to 32.63 percent till the third quarter of the F/Y 2012-13. The ROA of the bank is also seen negative. It is at -1.95 percent.&nbsp;</p>
	<p>
		Vibor Bikas Bank is again going ahead with a proposal of merger with Kist Bank Ltd. &nbsp;The NPL of the Kist Bank Ltd is seen comparatively lower than of the Vibor Bikas Bank. The ratio was at 32.63 percent and 7.89 percent for Vibor Bikas Bank and Kist Bank respectively as of third quarter of the F/Y 2012-13. &nbsp;Both the banks have posted the negative ROA during the third quarter of the FY 2012-13. Similarly, Vibor Bikas Bank has not been able to maintain the good level of CD ratio during the period.</p>
	<p>
		Recently, Bank of Asia Nepal Ltd and NIC Bank Ltd have received LoI from NRB for merger. The banks have already announced a plan to publish their combined financial report of the fourth quarter of F/Y 2012-13 in the name of the merged entity, NIC Asia Bank Ltd. Both the banks’ indicators show that they are in a financially sound position. After the merger they are likely to emerge even stronger in the banking market.</p>
	<p>
		<img alt="Financial Indicators of Some Merged and to be Merged BFIs:" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_financial_indicators.jpg" style="margin:0 10px 0 0;" /></p>
</div>
<div>
	<hr />
	<p>
		<strong style="font-size: 12px;"><span style="font-size: 12px;"><br />
		</span></strong></p>
	<p>
		<strong style="font-size: 12px;"><span style="font-size: 12px;">‘Merger is a need of the entire financial system’</span></strong></p>
	<p>
		 </p>
	<p>
		<strong><img alt="Bhaskar Mani Gyawali, Spokesperson, NRB" height="240" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_bhaskar.jpg" style="float:left; margin:0 10px 0 0;" width="200" />What &nbsp;is the situation of merger in the banking and financial Institutions (BFIs)?</strong></p>
	<p>
		The trend of merger in BFIs has grown lately. &nbsp;After the introduction of Merger Bylaws in 2011 by Nepal Rastra Bank (NRB), 22 financial institutions merged to become 10 within a year. This is very encouraging.</p>
	<p>
		<strong>Why is there a need for merger in the financial market?&nbsp;</strong></p>
	<p>
		Financial institutions have mushroomed in the country, thanks to the liberal policies adopted by Nepal Rastra Bank in the past. Given the size of our financial system, the number of BFIs looks more than normal. Many of these institutions had invested in the real estate sector without any long-term benefits. NRB was forced to fix a ceiling on real estate investment by banks after a surge in the volume of nonperforming loans.</p>
	<p>
		Investment by financial institutions in unproductive sectors caused a liquidity crisis in the market. These institutions also failed to maintain corporate governance. &nbsp;Financial institutions should be able to return money to depositors as required. NRB had introduced Merger Bylaws 2011 to improve the condition of financial institutions.</p>
	<p>
		<strong>Why are there no expected improvements in merged institutions?</strong></p>
	<p>
		Merged organizations are much improved in comparison to single and troublesome financial institutions. The process of merger has helped institutions increase their capital base and ability to return the people’s money.&nbsp;</p>
	<p>
		<strong>Can you briefly tell us the merger process?</strong></p>
	<p>
		Merger is a need of the entire financial system of Nepal. The share swap ratio is obviously an issue of tension in the pre-merger phase. NRB provides counseling services to all institutions which want to go for merger. The process is very simple. At first, the BFIs should take the special decision of merger thorough the General Meeting of shareholders. Then they should sign a Memorandum of Understanding (MoU) for merger. Then, after forming a merger committee, they should apply to the central bank for the Letter of Intent. NRB conducts interaction with concerned stakeholders and provides insights including strengths and weaknesses of the merging BFIs. If BFIs want to continue the merger process even after the interaction, NRB approves the LoI. Concerned financial institutions should approve new structure which will come into effect after the completion of the merger process.</p>
	<p>
		&nbsp;NRB should always deal the entire merger process carefully because merger should not promote monopolistic business.</p>
	<p>
		<strong>What are the post-merger complications? Does NRB intervene if complications arise in the post-merger phase?</strong></p>
	<p>
		Some minor complications are inevitable in the post-merger phase. Salary disputes, implementation of new structure and other managerial work create several complications. NRB provides the necessary assistance if the situation so demands. Similarly, the central bank may opt for positive intervention if the post-merger complications start to hurt the entire transactions of the concerned BFI.</p>
	<p>
		<strong>Are the BFIs reluctant for mergers?</strong></p>
	<p>
		Definitely not. But merger is a complex process. Two or more institutions can opt for a merger when they develop a sense of mutual trust. Many chiefs have to agree to make one chief. Jumbo administrative committees have to be downsized. The present scenario of mergers is pretty exciting.</p>
	<p>
		<strong>Is merger a less attractive proposition because of the low incentives for the same?&nbsp;</strong></p>
	<p>
		First, organizations should be aware about the merger process. They should be aware that merger is not for NRB but for them. This is because it is their responsibility to make the organization stronger and sustainable. Providing different incentives and schemes to organizations is like luring a child by giving them chocolates. It is unnecessary to entice them like that.&nbsp;</p>
	<p>
		<strong>The incentives provided to the merging institutions have been discontinued. What about reintroducing these insentives to the institutions that will merge now ?</strong></p>
	<p>
		NRB couldn’t continue the facility because of the incomplete budget. &nbsp;As soon as we have a full budget, NRB will renstate these facilities. The central bank is committed to facilitate the merger process.&nbsp;</p>
	<p>
		<strong>Where has NRB’s preparation regarding bylaws related to acquisition reached?</strong></p>
	<p>
		Legally, BFIs &nbsp;which want to acquire the stake of any &nbsp;other financial institution can do so. The only difficulty is that NRB does not have any specific guideline and legal provision to tackle the issue of acquisition. NRB, however, is very supportive if any financial institution wants to acquire the stakes of other institution.</p>
	<p>
		<strong>Is NRB considering forced mergers?</strong></p>
	<p>
		 </p>
	<p>
		NRB is not for forced mergers because there is a need for mutual bonding in order to operate the merged entity smoothly. But NRB might force institutions which are in miserable financial status and cannot improve the same over a period of time.</p>
</div>
<div>
	<hr />
</div>
<p>
	<strong>Initial Public Offering in Banking Sector</strong></p>
<p>
	<strong><br />
	</strong></p>
<p>
	<img alt="Niraj Giri" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_niraj.jpg" style="float:left; margin:0 10px 0 0;" width="200" />The capital market is a mechanism created to facilitate the exchange of financial assets with a maturity period of more than a year. It is a broad term embracing the buyers and sellers of securities and all the agencies that assist the sale and resale of securities.&nbsp;</p>
<p>
	Capital market activities started in Nepal in 1937 with the issuance of the shares of Biratnagar Jute Mills Ltd. However, a more structured market activity started with the establishment of a stock trading mechanism in 1976 along with the establishment of the Securities Exchange Center. Enactment of the Securities Act and establishment of the Securities Board in 1983 gave the impetus for the development of capital market in Nepal in a more organized manner. In the early 90s after the success of the first People’s Movement, the government adopted liberal economic policies and opened up various areas to the private sector. This paved the way for the entry of private banks into the country’s financial market.&nbsp;</p>
<p>
	With the opening up of the economy, banks and financial institutions (BFIs) from the private sector have been in the forefront of making initial public offerings (IPOs). The IPOs of BFIs are also the most sought-after IPOs in the secondary market. In fact, most of the trading that takes place in the secondary market is that of the shares of companies from the banking and financial sector. So, this sector has played a major role in the development of our capital market., the number of companies listed at Nepal Stock Exchange (NEPSE) as of May 17, 2013 was 224 of which 29 are commercial banks and 142 development banks and finance companies. Besides, 68 per cent of the daily trade at NEPSE is of the shares of commercial banks. This shows that the secondary market in Nepal is highly dominated by the banking sector. Why is this sector so dominant?</p>
<p>
	There are various reasons. First and foremost is the licensing requirement of Nepal Rastra Bank (NRB), the central bank. NRB has made it mandatory for BFIs to issue their shares to the public. BFIs have to go for IPOs within two years of obtaining the operating license from the central bank. Besides, in IPOs, funds flow from the provider to the user. This means the contribution of IPOs to financing companies is direct in the sense that it provides them with additional funds for either starting a new business or expanding or diversifying the existing ones. This might not sound true for banking sector companies. However, IPOs fetch them funds which they can use to lend or to meet the various other requirements such as capital requirement set forth by the regulator. IPO also gives the public investors a partial ownership of the company and an opportunity to be represented at its board of directors. This representation of public directors in the board helps to bring about transparency and good governance at the higher echelon of the company.</p>
<p>
	When Janata Bank Ltd &nbsp;issued an IPO worth Rs 600 million last year, it was believed that the bank had ill-timed the issuance as the secondary market indicator, the NEPSE index, was bearish. &nbsp;Investors were pulling out of &nbsp;the secondary market and the merchant bankers related with the IPOs, too, were worried about the subscription. However, when the IPO closed, the issuance had been oversubscribed by 2.43 times. This showed that the investors still had confidence in the IPOs of commercial banks. The IPO of Janata Bank was followed by that of Civil Bank Ltd which &nbsp;issued an IPO worth Rs 800 million which, in turn, was oversubscribed by 6.38 times. Recently, Commertz &amp; Trust Bank Ltd made an IPO worth Rs 600 million which was oversubscribed by 11.64 times. During the same period, IPOs of some development banks and finance companies were undersubscribed or even cancelled.&nbsp;</p>
<p>
	NRB has put a lot of emphasis on good corporate governance practices in the banking sector and banks are under constant supervision of the central bank. Barring a few, most banks have been giving good returns, in terms of cash dividend and bonus shares to their investors. The investors, too, have benefitted from a higher capital gain from the trading of shares of banks, compared to those of companies from other sectors. There is also a belief amongst the investors that commercial banks do not fail. This has boosted the investors’ confidence in banking stocks.&nbsp;</p>
<p>
	Both the government and the central bank have been persuading the BFIs for mergers in order to strengthen the banks and consolidate the growth of the financial sector. Some financial institutions have opted for merger and the effects of this will be seen on the market in the coming days. Though difficult, mergers will definitely strengthen the banks' capital base and enhance their operational efficiency through synergic effects. This, in turn, will attract more investors to banking stocks.&nbsp;</p>
<p>
	<span style="font-size:10px;">(The author is a Director at SEBON)</span></p>
<div>
	<hr />
</div>
<p>
	<strong>Problems of Merger</strong></p>
<p>
	<strong><br />
	</strong></p>
<p>
	<img alt="Krishna Raj Lamichhane" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_krishna.jpg" style="float:left; margin:0 10px 0 0;" width="200" />The country’s banks and financial sector witnessed a significant change with the introduction of merger bylaw by Nepal Rastra Bank (NRB), the central regulatory body of banks and financial institutions (BFIs). The bylaw has provided unique opportunities to BFIs to overcome the problem of capital inadequacy.</p>
<p>
	Nepal Rastra bank enacted merger bylaw in 2011 and the pace of merger have accelerated after that. The reasons of mergers among banks and financial institution is obvious, they want expand their presence in the market. Some major reasons of merger are as mentioned below:</p>
<p>
	<strong>Increase capital base:</strong> The reason of most of the mergers is that banks want to increase their capital base. The central bank has urged banks to enhance capital base to expand their services into the urban areas especially in the capital.</p>
<p>
	<strong>Expand services: </strong>Banking consolidation helps concerned institutions expand their services. For instance, merger provides opportunities of utilizing each other’s brand and public relation jointly. Banks and financial institutions can expand their services after increasing their capital base. Similarly, merger helps banks to increase investment capacity that will make them capable of investing in huge projects.</p>
<p>
	<strong>Implementing new and innovative ideas: </strong>Banking consolidation through merger will allow BFIs to explore chances of coming up with innovative ideas. Together, the banks and financial institutions can enhance their operation system and implement effective management.</p>
<p>
	However, the process of merging of banks and financial institutions is not free of hassles. There are basically two types of hassles to complete the merger process: i) external or created by the regulator and ii) internal or the managerial problems within banks and financial institutions.</p>
<p>
	At present, the central bank has made it mandatory to stop trade of shares after starting the merger process which, I think, should be changed. I do not see any logic and rationale behind this provision.&nbsp;</p>
<p>
	Similarly, the government does not provide any facility to the banks and financial institutions which want to be merged. I feel that the government should reduce corporate tax to 25 per cent from existing 30 per cent for five years after merger process complete. It is necessary because BFIs should invest huge chunks of money in managerial activities to complete the merger process. It is really challenging to ensure smooth transition and resolution of conflict likely to surface among the staff due to hostility, ego clashes or layoffs during the merger process.</p>
<p>
	It is a fact that the existing merger process between various financial institutions seem to be more forceful in nature. I do not mean that the Nepal Rastra Bank has put any pressure for mergers but the circumstances have made BFIs merge. I think the government should create an environment where banks and financial institutions voluntarily show their readiness to be merged.</p>
<p>
	<span style="font-size:10px;">(Writer is Chairman of Development Bankers Association and CEO at Kailash Bikash Bank)</span></p>
<div>
	<hr />
</div>
<div>
	<div>
		<strong>Merger and Its Challenges</strong></div>
</div>
<div>
	<strong><br />
	</strong></div>
<p>
	<img alt="Guru Prasad Paudel" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_guru_prasad.jpg" style="float:left; margin:0 10px 0 0;" width="200" />Business organizations can combine with each other in a various ways. One of the most common approaches is Mergers and Acquisition (M&amp;A), which combine independent firms under common control. After unveiling a merger bylaw, the practices of M&amp;A in Nepali banking sector has been increasing tremendously. Around two dozen BFIs merged each other and created 13 institutions. More than two dozen BFIs have got the letter of intent (LOI) to go for the merger. Even if merger has been practiced in the financial sector to cope the various issues, there has been no real academic effort to extensively appraise how employees are reacting, adapting and coping with the new realities in the post– merger period as well as how BFIs are achieving their business targets.&nbsp;</p>
<p>
	Furthermore, we should not forget that in achieving the objective of BFIs merger, quite a number of intrinsic risk factors may be involved both during and post merger period which should have to be address by regulators as well as by bank BOD and senior management level.&nbsp;</p>
<p>
	Literature says, merger that has been practiced internationally is not less challenging. Some inherent features of merger as well as some country specific problems add more challenges in it. In the past, tangible aspects (e.g. capital, raw materials, equipment etc.) were the major issues of merger. Now the scenario has changed, and intangible aspects (e.g., human capital, culture, knowledge, goodwill, brand etc) are emerging as key challenges. &nbsp;</p>
<p>
	We adopted merger strategy very lately; though it has more than 120 years long history internationally. Nepal dose not have separate Act about M&amp;A, so there may arise some legal risk in the future. Today, large BFIs desire to acquire small financial institutions but we have no Acquisition provisions. M&amp;A is significantly affected by the geo-political condition of the country. Present situation of our country is unfavurable for mergers because of the rise in concept of divergence and dissolution, which is a serious external threat for merger. Lack of specific Act and provisions regarding acquisitions and geo-political scenario are major challenges. Besides these, some challenges and problems are as follows:&nbsp;</p>
<ul>
	<li>
		Top executives and top level management team may leave unexpectedly. When they leave the merged organization the expected synergy will be evaporated.</li>
	<li>
		Expected synergies evaporate also because of cultural differences. Research says only 23 percent of all M&amp;A earn their cost of capital.</li>
	<li>
		Data migration plays vital role in the merger, sometimes this single task will be multi-time expensive than other factors of merger.&nbsp;</li>
	<li>
		Expenses get increased because of disposal of old stationeries, write-off provisions of duplicated branches.&nbsp;</li>
	<li>
		Power politics can be a major obstacle to the success of M&amp;A.</li>
	<li>
		Agency problem is another key challenge of M&amp;A.</li>
	<li>
		Who are going to leave from the BOD &nbsp;will be an anxious issue.&nbsp;</li>
	<li>
		It further creates anxiety while selecting CEO or top level management officials because the institutions undergoing merger have their own individual CEO or higher management authorities.&nbsp;</li>
	<li>
		Due Diligence Audit Report (DDAR) does not give accurate price of the institutions hidden contingent liabilities may get added which further enhance the challenge in the merger.&nbsp;</li>
	<li>
		Management of employee of duplicated branches is yet another high value expense occurred due to merger.</li>
</ul>
<p>
	<span style="font-size:10px;">(Writer is Deputy Director at Nepal Rastra Bank. The views expressed here do not necessarily represent the views of NRB)</span></p>
<div>
	 </div>',
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			'created' => '2013-06-07',
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			'keywords' => 'Nepali Banking In Transition Through Mergers And IPOs, Cover story, Banking, Mergers, New Business Age, June 2013',
			'description' => 'As per the NRB’s latest data, the country has 31 commercial banks, 87 development banks, 80 financial companies and 21 micro-finance companies. The number shows that there is tough competition among banks and financial institutions (BFIs) forcing them to face multiple challenges. The major one is surely the capital base.',
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			'article_category_id' => '40',
			'title' => 'Revisiting Nepali Consumers: Facts, Trends & Business Impacts',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="font-size: 12px;">Many believe that Nepal is still an under-explored market given the potential it has. The market is growing and chances of further expansion are still very high due to the increased awareness and affordability of consumers. The world’s leading brands available in Nepal have created an environment in which consumers can expect to get what they want. &nbsp;Every product has been putting their effort to get a hold in the market by expanding their consumer-base.&nbsp;</strong></p>
<p>
	<strong>Based on Purchasing Power Parity (PPP) Nepal’s Per Capita Income has doubled in 32 years. Recently released Human Development Report 2013 by the United Nations Development Program (UNDP) has revealed that the gross national income (GNI) per capita in PPP increased by 101 percent to US$ 1,137 in 2012 compared to 1980. Inflow of remittance and an large portion of youth population has made Nepal a potential market to companies.</strong></p>
<p>
	<strong>In this issue, New Business Age provides marketers and companies with some interesting insights to know the changing consumers landscape in Nepal.</strong></p>
<p>
	<span style="font-size: 12px;">In the capital Kathmandu, varieties of goods and shopping places can be found within a few minutes from their homes. People can find products according to their affordability. There are varieties of price ranges and choices to consumers. Family run groceries are still the norm in Nepal, but supermarkets and malls are also doing good business.&nbsp;</span></p>
<p>
	Despite economic slowdown, the consumption of fast-moving consumer goods (FMCGs) has not dropped but constantly going up. Nepal has been witnessing satisfactory growth in per capita food and non-food consumption expenditure. Household consumption of fast moving consumer goods (FMCGs) has also gone up. Multiple factors have contributed in expansion of Nepal’s market.&nbsp;</p>
<p>
	The visible growth of Nepal’s economy, especially income of the people, over the last decade has put more money in the pockets of the country’s middle class, prompting retailers to target this group of consumers.&nbsp;</p>
<p>
	<strong>Census 2011</strong></p>
<p>
	In the report of National Population and Housing Census 2011 published by the CBS, the population of the country has grown to 26.6 million with 1.35 percent annual growth rate since the last census that was concluded in 2001.</p>
<p>
	Thus, Nepal is the market of 26.6 million consumers including 12.8 million male population and 13.64 female. The census report shows that Terai region constitutes of 50.27 percent (13.31 million) of the total population. Similarly, hilly and mountain areas constitute 43 percent (11.39 million) and 6.73 percent (1,781,792) respectively.</p>
<p>
	Highlights:</p>
<ul>
	<li>
		Population: 26,494,505</li>
	<li>
		Households: 5,427,30</li>
	<li>
		Average household size: 4.88</li>
	<li>
		Sex ratio (number of males per 100 females): 94.2 (Number of male per 100 female)</li>
	<li>
		Urban population: 17 per cent</li>
	<li>
		Population density (average number of population per square km): 180</li>
</ul>
<p>
	<strong>Age Groups and Corresponding Market</strong></p>
<p>
	The age of the consumer determines the type of products sellable in the market.&nbsp;</p>
<p>
	Normally, a young person is fashion conscious in the choice of products, while a middle-aged person is status conscious.</p>
<p>
	The age group of 10-14 years of the population is seen the highest (when compared to other 5-year gap intervals) in Nepal as per the 2011 census data. Also, the female population is slightly more than that of males. There are 13,645,463 women in Nepal, which accounts for 51.5 percent of the total population, while the number of males is 12.84 million. &nbsp;Higher population of women shows that the market of cosmetics items, clothing and boutiques are very good in the country.&nbsp;</p>
<p>
	<img alt="Age Groups and Corresponding Market, Cover Story, Revisiting Nepali Consumers" height="304" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_age_group_and_corresponding_market.jpg" width="506" /></p>
<p>
	<strong>Youth Population</strong></p>
<p>
	The census data shows that more than half of the population, about 55 per cent, is below 25 years of age. According to the 2011 census report, some 34.91 per cent of the population is aged below 14 years and another 19.97 per cent is aged between 15-24 years.</p>
<p>
	This is one of the reasons why many world players are coming and establishing their presence here in the Nepali market. Young Nepalis today expect a lot more from their lives, and often face pressure that was unfamiliar to earlier generations. Young people often want to keep up with global fashions and market trends. Their passion of following global fashion and trends has created many opportunities in Nepali market. Though Nepali population is mostly young, the size of old-age population has been increasing as well offering increased opportunity for business that provide goods and services to aged.&nbsp;</p>
<p>
	<strong>Family Size and the Family Life Cycle</strong></p>
<p>
	The buying decision in a large family is more complex as several individuals play different buying roles, such as that of initiator, influencer, prayer, buyer and users, economist Dr Chiranjivi Nepal says. He opines that the large families generally buy a single brand while small families are found to be more brand-switching. Consumers’ product varies according to the stage of their family life cycle. The consumption pattern of a bachelor is different from that of a man with several children.</p>
<p>
	The average household size of Nepal is 4.88 as per the 2011 census data. The household size of the urban and rural was seen 4.32 and 5.02 respectively. The largest household size was seen in Rautahat district with 6.44 and the lowest of 3.92 in Kaski district.</p>
<p>
	<strong>Remittance</strong></p>
<p>
	Around 1,500 Nepali workers go abroad for employment every day and it is their remittance that keeps the Nepali economy afloat, opines economist Nepal.&nbsp;</p>
<p>
	According to the World Bank, Nepal ranked 6th in the world among top remittance-receiving countries in 2011, with remittances making up 20 per cent of its GDP. A total of 56 per cent of the total households in Nepal receive remittances. Of which, 48 per cent comes from international labour migration, according to Central Bureau of Statistics. Accounting for more than 20 per cent of the GDP, migrant labourers brought in Rs 359 billion in the last fiscal year alone.</p>
<p>
	<img alt="Remittance, Revisiting Nepali Consumers" height="206" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_remittance.jpg" width="515" /></p>
<p>
	<strong>Education</strong></p>
<p>
	Of the total population, 39.04 percent are at the level of primary education. The male population dominated all the regions of the country in the literacy level. 65.94 per cent of the total population are literate (can read and write) in Nepal. &nbsp;2.52 percent of the population of Nepal can read only as per census data. Kathmandu has the highest literacy rate and Humla, the lowest with 86.3 per cent and 47.8 per cent respectively. The school enrollment of Nepal is seen at 95.1 per cent as per census data. This means over 95 per cent of school going age population is actually enrolled in schools. This indicates to very good market for educational material and education-related services.</p>
<p>
	<img alt="Population Aged 5 years and above by Literacy Status, Revisiting Nepali Consumers, Cover Story" height="215" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_population_5years_above_literacy_status.jpg" width="528" /></p>
<p>
	<strong>Toilet Use</strong></p>
<p>
	More than one-third, i.e., 38.17 per cent of the Nepali population does not have toilet facility. In Terai region, a total of 51.24 per cent of population are still without toilet facility.&nbsp;</p>
<p>
	However, the trend of constructing the flush toilet and squat toilet with septic tank is increasing in the country including both in the rural as well as in urban areas. Therefore, the business of sanitary ware has also been going up.&nbsp;</p>
<p>
	<img alt="Toilet Use, Revisiting Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_toilet_use.jpg" /></p>
<p>
	<strong>Rural Market&nbsp;</strong></p>
<p>
	Though the business volume may be big in Kathmandu and urban areas, Nepali villages offer very good markets in terms of the number of consumers as about 82.30 per cent of the population of the country is living in rural areas.&nbsp;</p>
<p>
	Interestingly even some parts of the urban population &nbsp;have rural consumption behaviour. And urban characters can be seen also in some rural areas due to the influence of remittance, for example. However, purchasing capacity of rural community is low compared to urban population. Rural population still depends on agricultural activities. The consumption habit, however, has been changing in the rural areas too. One reason is the road access and the other is education. Also the availability of electricity and cable TV as well as opening of cinema halls in those rural areas have been changing the consumption habit in rural Nepal.</p>
<p>
	Many companies have been launching products targeting the rural population. Comparatively low-cost products and micro-packing are main strategies adopted by companies to get a hold in rural areas.&nbsp;</p>
<p>
	<img alt="Rural Market, Revisiting Nepali Consumers, Cover Story" height="86" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_rural_market.jpg" width="390" /></p>
<p>
	 </p>
<p>
	<strong>Fuel</strong></p>
<p>
	According to National Population Census 2011, Nepal still relies heavily on firewood to fulfill its fuel demand for the purpose of cooking. However, the consumption of Liquefied Petroleum Gas (LPG) has significantly increased in the recent years which has created lots of space for the business of LPG stoves, regulators, pipes, cylinders and other necessary accessories.&nbsp;</p>
<p>
	One interesting fact about source of fuel for cooking is that big urban districts like those in the capital (except Lalitpur), Parsa, Kaski and Morang do not feature among the top users of electricity. Obviously the frequent power outage and cheap price of LP Gas have prompted the households ot shift to LP Gas in those districts.</p>
<p>
	<img alt="Fuel, Revisiting Nepali Consumers, Cover Story" height="717" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_fuel(1).jpg" width="389" /></p>
<p>
	<strong>Lighting Sources</strong></p>
<p>
	Electricity is seen as the major source of lighting for Nepali households. Total of 67.26 percent of the population is using electricity as the source of lighting. Similarly, kerosene is the second major source of lighting (18.28 per cent). But these households suffer from frequent power outage.</p>
<p>
	This has created much opportunities for the traders of invertors and batteries as well as solar power systems.</p>
<p>
	Therefore, business of electricity accessories such as bulbs, wires, poles and ceiling lights is doing well in Nepali market. At the same time, business of solar energy has also gone up and possibility of bio-gas related business is also very high in the Nepali market.&nbsp;</p>
<p>
	<strong><img alt="Lighting Sources, Revisiting Nepali Consumers, Cover Story" height="607" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_lightening_sources.jpg" width="385" /><br />
	</strong></p>
<p>
	<strong>Religious Cultural Factors</strong></p>
<p>
	In September 2012, World’s famous fast food chain McDonalds launched its first vegetarian restaurants in India targeting Indian Hindu. The reason of launching vegetarian products was obvious that McDonalds did not want to lose Hindu consumers.&nbsp;</p>
<p>
	Cut-throat competition among various companies and outlets has created a scenario whereby all companies try to lure consumers by offering what they want. Nepal is multi-religion country and companies may want to tap consumers according to religion.&nbsp;</p>
<p>
	Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services.&nbsp;</p>
<p>
	<img alt="Religious Cultural Factors, Revisitng Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_religious_cultural_factors.jpg" /></p>
<p>
	<img alt="Cultural Composition, Revisiting Nepali Consumers, Cover Story" height="393" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_religious_cultural_composition.jpg" width="496" /></p>
<p>
	<strong>Absent Population</strong></p>
<p>
	One in every four households (25.42%; 1.38 million households) reported that at least one member of their household is absent or is living out of country. Total number of absent population is found to be 1,921,494 in 2011 census against 762,181 in 2001. The highest proportion (44.81 percent) of absent population is from the age group 15 to 24 years. Gulmi, Arghakhanchi and Pyuthan districts reported the highest proportion of their population being absent (staying abroad).</p>
<p>
	<img alt="Top five Absent Population District, Revisiting Nepali Consumers, Cover Story" height="153" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_absent_population_district.jpg" width="595" /></p>
<p>
	<img alt="Top Ten Destination of Migrant Nepali Workers, Revisiting Nepali Consumers, Cover Story" height="764" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_remittance_migrant_workers.jpg" width="380" /></p>
<p>
	 </p>
<p>
	<strong>Media Consumption</strong></p>
<p>
	The media consumption patterns, profiles of audiences on different platforms and media types, and the effectiveness of advertising across platforms have been significantly changed over the last decade.&nbsp;<span style="font-size: 12px;">Consumers concentration has been shifted to the television from radio, according to Managing Director at JWT-Thompson Nepal Joydeb Chakravarty. “Ten years back the national media was radio but today more people watch television,” he says.&nbsp;</span></p>
<p>
	<span style="font-size: 12px;"><img alt="Media Consumption, Revisiting Nepali Consumers, Cover Story" height="262" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_media_consumption.jpg" width="521" /><br />
	</span></p>
<p>
	<strong>Computer and Internet</strong></p>
<p>
	Computers and Internet products are also growing day by day. The number of Internet users in Nepal has accelerated in the country. Access to the Internet has positive implications for society and the economy. A study carried out by Computer Association of Nepal (CAN) last year showed that the computer penetration rate in the country had crossed five per cent. The survey was carried out based on the record of import of computer monitors and branded laptops, according to CAN general secretary Narayan Neupane. The penetration rate of computer at present may have crossed eight, he says, adding that the trend of using computers is on the rise since schools, health institutions, clubs and other social groups in far flung areas of the country have started using computers for their day-to-day activities.&nbsp;</p>
<p>
	<img alt="Computer and Internet, Revisiting Nepali Consumers, Cover Story" height="171" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_telephone.jpg" width="531" /></p>
<p>
	<strong style="font-size: 12px;">Automobiles</strong></p>
<p>
	Nepal has been seeing the penetration of two- and four-wheelers increasing at a rapid pace, thanks to the expansion of road connectivity and increased income of citizens. Expansions of road network throughout the country and a steep rise in the number of migrant workers have played a catalytic role in the growth of automobile sales.&nbsp;</p>
<p>
	So, many automobile brands have been able to establish themselves and automobile has become one of the largest customs duty contributors in the country. Nepali consumers have been using four-wheeler ranging from the most expensive one to the cheapest Nano car. Similarly, Nepal-assembled brands such as Mustang and Sherpa has also been rolling on Nepali roads. &nbsp;</p>
<p>
	<img alt="Top three districts with various Vehicles facilities, Revisiting Nepali Consumers, Cover Story" height="280" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_vehicles.jpg" width="533" /></p>
<p>
	<strong>ICT and Mobile</strong></p>
<p>
	Not only telecom sector but also the market of entire Information and Communication Technology (ICT) has expanded over the last few years. As far as mobile market is concerned, Nepal has approximately Rs 15 billion transaction every year, according to chairman of Mobile Traders Association of Nepal Purushottam Basnet. Nepal has been very potential market for mobile phone sets and other ICT products.</p>
<p>
	<img alt="Top three districts with ICT and Mobile, Revisiting Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_ict_mobile.jpg" /></p>
<p>
	<strong>Home Appliances&nbsp;</strong></p>
<p>
	Sales of the home appliances have tremendously increased over the last year. The sales of refrigerators, washing machines, vacuum cleaners, LEDs and LCDs has boosted in the recent years. Besides, people living in urban areas are continuously upgrading their living standards, and home appliances are deemed as components that add value to their living condition. The market of home appliances has also increased in the rural areas too.&nbsp;</p>
<p>
	<img alt="Top three districts with  Refrigerator facilities, Revisiting Nepali Consumers, Cover Story" height="160" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_home_appliances.jpg" width="532" /></p>
<p>
	<span style="font-size: 12px;">Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services.&nbsp;</span></p>',
			'published' => true,
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			'keywords' => 'Revisiting Nepali Consumers: Facts, Trends & Business Impacts, Cover Story, New Business Age',
			'description' => 'Many believe that Nepal is still an under-explored market given the potential it has. The market is growing and chances of further expansion are still very high due to the increased awareness and affordability of consumers.',
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			'id' => '999',
			'article_category_id' => '40',
			'title' => 'Young Consumers Have Smart Perspective On How To Spend Money',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong>Mani Raj Dahal</strong></address>
<address>
	<strong>Country Manager</strong></address>
<address>
	<strong>The Nielsen Company Nepal Pvt Ltd</strong></address>
<p>
	<span style="font-size: 12px;"><br />
	</span></p>
<p>
	<span style="font-size: 12px;">It is very important to assess how the market is doing and what the current trends of consumption are to revisit the consumers. Nepal is still an unexplored market in many fields and, therefore, it offers possibilities of market expansion to companies. It is worthwhile to mention here that the spending and consumption habit of consumers are positive in Nepal, despite the huge political problems the country is going through.&nbsp;</span></p>
<p>
	<strong>Rising Consumerism&nbsp;</strong></p>
<p>
	There is a tremendous potential in the country for companies to expand their products and services.&nbsp;<span style="font-size: 12px;">The swelling consumerism has seen the introduction of a range of new products like ready-to-eat snack foods, breakfast cereals, textures vegetable protein foods and so on. Different brands of the same item and attractive packaging vie &nbsp;for the consumers’ attention.</span></p>
<p>
	<strong>Spending Capacity</strong></p>
<p>
	The increased spending capacity of consumers is really a good sign in the Nepali market. &nbsp;The inflow of remittance and tourism have contributed to increase the income of consumers. The purchasing power of consumers has a direct impact on the market expansion.&nbsp;</p>
<p>
	Every investor asks some questions before starting a business: how big is the market and what are the possibilities of growing? And the scenario in Nepal is not so bad. Though Nepali market is not that big, there’s enough room for new companies and brands.&nbsp;</p>
<p>
	<strong>Youth Focused Market</strong></p>
<p>
	At present, the consumption of Nepali young generation forms a thriving market. Young consumers are usually impressed with branded and quality goods and services then being purely price sensitive . Companies and service providers can take advantage of this to further set up their brand image.<span style="font-size: 12px;">The young generation enjoys a staggering amount of purchasing power in the country due to foreign employment and inflow of remittance. Young consumers not only have money, but also have smart perspectives on how to&nbsp;</span><span style="font-size: 12px;">spend money.&nbsp;</span></p>
<p>
	<strong>Consumerism and Socialisation</strong></p>
<p>
	It is really interesting to mention here that Nepali culture has changed over the years due to technology and consumerism.&nbsp;<span style="font-size: 12px;">Our socialization process has changed, compared to some years ago. Lifestyle and consumption habits are considered to be the main reason for the socialization and it is obvious that the process of socialization has changed throughout the last one or two decades. For instance, we can take café culture, business in Valentine Day or may be English New Year.&nbsp;</span></p>
<p>
	<strong>Nepali Products</strong></p>
<p>
	Entrepreneurship is something that will help the country to achieve sustainable development. The chances of entrepreneurship are very high in Nepal, all we need is creative minds and creative ideas. In Nepal, the chances of branding local products are very high. Nepali people are very much habituated to consume Nepali food and drinks trend and young entrepreneurs can establish Nepali brands of that sector. The typical Nepali style goods are also making their brands .</p>
<p>
	<strong>Price Hike Impact&nbsp;</strong></p>
<p>
	It is an interesting fact that in Nepal, despite the frequent price hike of Fast-moving Consumers Goods (FMCG), the market has not seen a drop in the demand of such goods. This indicates that consumers have got the capacity and are willing to pay more for the products of their choice of consumption.</p>',
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			'description' => 'Entrepreneurship is something that will help the country to achieve sustainable development.',
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			'article_category_id' => '40',
			'title' => 'When You Build Your Own Brand You Are Able To Command A Premium Rate',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong><span style="font-size: 12px;">Joydeb Chakravarty</span></strong></address>
<address>
	<strong>Managing Director</strong></address>
<address>
	<strong>JWT-Thompson Nepal</strong></address>
<p></p>
<p>
	<strong style="font-size: 12px;">Excerpts:</strong></p>
<p>
	<strong style="font-size: 12px;">Some experts say that Nepal is still an untapped and unexplored market. Do you agree?</strong></p>
<p>
	Nepal was first country in the region to be exposed to international brands. Some 30 years back, India did not have the access and exposure to the brands that were here in Nepal. Nepali consumers have always been exposed to these kinds of international brands for last 30-40 years. So, when local brands try to enter this market they find it a challenge because consumers benchmark it with international brands that they have already used. It could be in any category, but the consumers give it a fair trial and if it does not meet their expectations then they have no hesitation in rejecting it. The Nepali consumers are very discerning indeed!</p>
<p>
	<strong>Can you please tell us some major differences in the consumers’ behavior in the past and present?</strong></p>
<p>
	Today the consumers have a different kind of exposure because of the reach and penetration of the international media. This has had very large impact to the consumers’ psyche. When you look at the way people dress, we see they are following the world’s leading trends. Nepali consumers’ tastes and trends have evolved over the last couple of decades. Look at the way they have embraced new technology, new gadgets and even smart phones. Look at two wheeler sector, earlier people went for something functional but not anymore. Now they want a higher-end bike to go with their perceived self-image. People have a much higher level of aspiration now, and want to show that through their material possession.&nbsp;</p>
<p>
	<strong>What are the practices of the companies regarding study of consumers’ buying behavior in Nepal?</strong></p>
<p>
	Client and organizations in Nepal are talking about research. Although, they might not always employ a professional research agency, they might want to do research in-house, through their own team, which is not the right way to do it, but it still goes some way. Earlier there a few companies who actually believed in market and consumer research but that’s changed. We now see that clients and companies are talking about research, which is a very positive sign.</p>
<p>
	<strong>How is the branding practice in Nepal? How important is branding from your perspective?</strong></p>
<p>
	Branding has caught on over the last two decades. Everything now seems to be branded. I am just not talking about the consumer goods, but commodities which at one time were sold loosely are now branded. Companies have now come to realize and appreciate that when you build your own brand you are able to command a premium rate.</p>
<p>
	<strong>What is the media consumption habit of Nepali consumers right now?</strong></p>
<p>
	If you see the ownership in the durables likes colour television (63% in 2012 Vs 13% in 2003), radio, refrigerator and mobile phones have drastically increased. Ten years back the national media was primarily radio based but today there are more people watching television than listening to the radio. Obviously radio has not been able to catch the imagination the listeners, while television has caught on despite having more than 350 FM radio channels in Nepal. The print too have taken its toll, readership has gone down over the last ten years even though literacy has gone up. The reason could be the high cover price of newspapers. The usage of the internet has gone up drastically from 2% in 2002 to more than 25% in 2012.&nbsp;</p>
<p>
	<strong>How do you envisage the importance of advertisement to catch the emotional side of consumers?</strong></p>
<p>
	If you are unable to connect with your customers on an emotional level, you will not be able to engage with them meaningfully. Consumers today have many interests and they are not waiting to see your advertisements! Unless you are able to make an emotional connection with your customers; make your advertisements distinctive, emotional, entertaining and engaging otherwise you cannot hope to catch their attention.</p>
<p>
	<strong>What are the contributing factors in the quality of advertisements? What are the reasons behind low quality of advertisement in Nepal?&nbsp;</strong></p>
<p>
	Over the last few years the quality of advertisements has not matched the expectation of the Nepali consumers. &nbsp;There are many reasons for that, no one wants to take a ‘risk’ and everyone wants to ‘play safe’. Companies feel that if they come up with a “creative” advertisement it might go over the head of their audience. There is very little the advertising agencies can do in that kind of a scenario. This is also compounded by the severe shortage of creative people in the advertising sector. Moreover, top quality advertising production – especially films cost huge amounts of money. The market here is very small compared to other countries&nbsp;<span style="font-size: 12px;">in the region.&nbsp;</span></p>',
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			'created' => '2013-05-22',
			'modified' => '2013-05-22',
			'keywords' => 'When You Build Your Own Brand You Are Able To Command A Premium Rate, cover story, New Business Age',
			'description' => 'Nepal was first country in the region to be exposed to international brands. Some 30 years back, India did not have the access and exposure to the brands that were here in Nepal. Nepali consumers have always been exposed to these kinds of international brands for last 30-40 years.',
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	(int) 7 => array(
		'Article' => array(
			'id' => '947',
			'article_category_id' => '40',
			'title' => 'New Year Hues: Products, Promises And People',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong>By Siromani Dhungana<br />
	<br />
	<br />
	<br />
	New Year Hues: Products, Promises and People</strong><br />
	<br />
	Outlets of the world&rsquo;s most famous brands have already started doing their business in Kathmandu providing consumers chances of more choices and selections. The powerful combination of sophistication in use of goods, changing lifestyle in the urban area and consumers&rsquo; access to information created by information and technology have brought about an unprecedented shift in the consumers&rsquo; brand use habit. On the other hand, it has created both opportunities and challenges for companies looking for potential buyers. Increased competition among various players has compelled them to lure customers by offering different packages. New Business Age tries to catch-up some existing market phenomenon in Nepal and explores the connection between products and people in the market.<br />
	<br />
	The fastest-growing middle and upper middle-class consumers have created many opportunities for companies in the Nepali market. Earning enough to afford quality brands and quality consumer experiences, the younger generation has become brand-focused and up to date with the latest arrivals. From gadgets, clothing and watches to other personal belongings, the new generation has become brand conscious and choosy.<br />
	&nbsp;<br />
	On the other hand, the increasing competition among different brands has forced companies to lure potential consumers by offering attractive packages. Various companies have been trying to lure consumers using various techniques including bumper offers, appointment of brand ambassadors, advertising campaigns in the media and other packages to ensure the success of their brands. Private business houses have been aggressively putting their effort to get a hold in the market, opines young entrepreneur Meele Shrestha of Maxlee Traders Pvt Ltd. New Year 2070 may not witness a drastic change in the market but it can create a different type of vibration, she adds.<br />
	<br />
	<br />
	<img alt="products" src="/userfiles/images/2070-1.jpg" style="margin: 10px; width: 400px; height: 280px;" /><br />
	<br />
	<strong>Marketing of Products</strong><br />
	<br />
	Marketers always think that if they want a product to catch on, they have to think up a catchy slogan or come up with a slick advertisement to create a buzz. It is really impossible to exactly assess what propels consumers to buy particular products.<br />
	<br />
	Advertising campaigns are not enough. Companies should also think about linking products to the environment and let the environment do the work besides the advertisement and other ways of publicity of products.Consumers&rsquo; behaviour is strongly influenced by subtle environmental cues. In Nepal, most consumers want to follow the wealthy population in terms of products consumption and buying. Availability, price structure and quality of products largely determine whether the product can hold the market.<br />
	<br />
	<br />
	<strong>Consumers&rsquo; Psychology</strong><br />
	<br />
	Even big companies around the world cannot always predict consumers&rsquo; psychology correctly. Sometimes, a simple product can create a trend in the market but other times even meticulously designed and decorated product may fail to attract consumers.<br />
	<br />
	Consumers&rsquo; decisions on products are driven largly by implicit associations with the imagery connected to a brand. And, sometimes their decision may be associated with the subconscious emotional appeal of products. Why and how people buy some products and not others? Consumers&rsquo; psychology is a specialty area that studies how our thoughts, beliefs, feelings and perceptions influence how we buy and how we relate to goods and services.<br />
	<br />
	<img alt="nepali market" src="/userfiles/images/2070-2.jpg" style="width: 400px; height: 266px; margin: 10px;" /><br />
	<br />
	<strong>Diversifying Nepali Market</strong><br />
	<br />
	Markets of various products and brands have a tremendous potential to expand in Nepal. The modern marketing approach is a post 1990 phenomenon, a large section of people is still out of the the modern market system leaving room for new and innovative companies to expand their presence. And that is happening too.<br />
	<br />
	Kathmandu has many outlets and high-end streets to showcase state-of-the-art brands of various products. The trend of opening modern outlets outside the Kathmandu valley is on the rise. Pokhara, Biratnagar, Dharan, Itahari, Birgunj among others are slowly waking up to the modern marketing approach.<br />
	<br />
	The population of Nepal as of June 22, 2011 stands at 26.49 million showing a population growth rate of 1.35 per annum, according to Central Bureau of Statistics. According to the Nepal Demographic and Health Survey, a total of 40 per cent of people are below 15 years of age and another 30 percent are between 15-49 years of age. Clearly, the country has a huge potential for products and brands. because of the large youth population.<br />
	<br />
	All companies need to win the hearts and minds of the consumers to get a foothold in the market. In this issue, New Business Age presents a consumer-focused story looking at various products and brands and they promises to the consumers for the New Year 2070 BS. It also looks at the preferences and opinions of some consumers from various segments of society:<br />
	<br />
	<br />
	<br />
	<strong>Automobile</strong><br />
	<br />
	Nepal has seen the penetration of two- and four-wheelers increase at a rapid pace, thanks to the expansion of road connectivity and increased income of citizens. Expansions of roads throughout the country and a steep rise in the number of migrant workers have played a catalytic role in the growth of automobile sales. So, many automobile brands have been able to establish themselves and automobile has become one of the largest customs duty contributors in the country. Nepali consumers have been using four-wheelers ranging from the most expensive one to the cheapest Nano car. Similarly, Nepal-assembled brands such as Mustang and Sherpa have also been rolling on the Nepali roads.<br />
	<br />
	In fact, the automobile market is all set to open a new avenue in the country. New Business Age has talked with highly popular automobile brands, Volkswagen and Honda, regarding their business prospects in Nepal (keeping the Nepali New Year 2070 BS in mind.)<br />
	<br />
	<br />
	<img alt="watch" src="/userfiles/images/watch.jpg" style="width: 400px; height: 248px; margin: 10px;" /><br />
	<br />
	<strong>Watches and Clocks</strong><br />
	<br />
	The Global Industry Analysts (GIA), Inc predicts that the global market for Watches and Clocks is poised to reach US$46.6 billion and US$5.4 billion, respectively, by the year 2017. In a report &lsquo;Watches and Clocks &ndash; a Global Strategic Business Report&rsquo; released last year, GIA has concluded that the recuperation in demand for luxury watches post recession, robust demand from developing markets especially the Asia-Pacific and rising popularity of fashionable, vintage and innovative models are forecast to drive market growth.<br />
	<br />
	The Nepali market for watches and clocks has been ballooning, say traders. Around 50,000 pieces of branded watches are sold every year in Nepal, according to them. Globally famous watch brands have already started their business in Nepal and are doing well. On the occasion of New Year, New Business Age has approached some top watch brands in the Nepali market. Most famous brands available in Nepal such as Rolex, Rado, Tag Heuer, Omega, Titanic and Esprit will focuse on advertising to attract consumers in the New Year, according to their authorised distributer in Nepal.<br />
	<br />
	<img alt="mobile" src="/userfiles/images/2070-6.jpg" style="width: 400px; height: 269px; margin: 10px;" /><br />
	<strong>Mobile</strong><br />
	<br />
	According to the latest data made available by Nepal Telecommunications Authority (NTA), Nepal&rsquo;s telephone penetration rate reached 70 per cent in mid- December 2012. The mobile handset market will go hand in hand with the mobile penetration rate and the trade in hand-held terminals that<br />
	&nbsp;<br />
	have increased significantly in the last couple of years. The annual transaction of mobile sets in the Nepali market stands at around Rs 13 billion, says president of Mobile Traders Association of Nepal, Purushottam Basnet.<br />
	<br />
	The cheaper series of android phones has created an &lsquo;android revolution&rsquo; in the country, he opines, adding that a mobile set was considered as a sophisticated personal belonging until not long ago, but it has now become an essential commodity.It is obvious the customers who the companies should always take care of, authorised sellers of mobile sets say. According to them, no special package has been developed so far focusing on Nepali New Year but consumers will definitely benefit due to increased competition and presence of many popular brands in the mobile market.<br />
	<br />
	<br />
	<img alt="wear/fashion" src="/userfiles/images/2070-8.jpg" style="margin: 10px;" /><br />
	<strong>Wear/Fashion</strong><br />
	<br />
	The young generation is &lsquo;fashionable&rsquo; and choosy. This generation also tends to emphasize brand value in their spending.It is very smart to follow the latest trends and embrace innovative fashion design. Today, those who can&rsquo;t afford a particular brand, would wait until they can.<br />
	<br />
	Fashion in Nepal is a fast growing industry with increasing events such as fashion weeks or beauty peasants. Now a days, many world famous brands are available in the Nepali market. Lee, Levis, Springwood, Northface, Jeanswest, Pashmina and others brands have succeeded to win the hearts and minds of Nepali consumers in the dress and fashion regime. However, some local designers, too, have made their presence felt.<br />
	<br />
	Dress and fashion-lovers in the town will have reason to cheer in the Nepali New Year because most of the dress brands and outlets are going to offer discount schemes or other packages. But it takes time to know the nature of the offers because brands do not want to reveal their special package in advance, because of competition.<br />
	<br />
	<br />
	&nbsp;<img alt="cosmetic" src="/userfiles/images/2070-11.jpg" style="width: 400px; height: 314px; margin: 10px;" /><br />
	<strong>Cosmetics</strong><br />
	<br />
	The country&rsquo;s cosmetics market has witnessed a rapid growth over the last couple of years. With each passing year, the availability of cosmetic products has increased significantly and the consumption rate has soared. There is no dearth of the world&rsquo;s leading cosmetic brands in the local market. Whatever you want, the market has it. Traders estimate that the country&rsquo;s cosmetic market is worth more than Rs 15 billion annually, and it is growing at the rate of 25-30 percent.<br />
	<br />
	A growing middle class and rising awareness about personal image and hygiene, which has resulted in greater spending on beauty and personal care products, has played a very constructive role on the rise of demand for cosmetic items. From globally recognized brands like Lakme, L&rsquo;Oreal, Garnier, VLCC and Emami to others like Mac&rsquo;s Lavera, Nova, Chase, Astaberry, Lotus and Ayur, the domestic market at current features around 80 brands of cosmetic products. The market is showing continuous growth, says Adhiti Adhikari of Laavanya brand.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>Airlines</strong><br />
	<br />
	Nepal saw a significant growth in air transport after the aviation policy was liberalised in 1992. The annual passenger movement reached around three million in 2012. According to Civil Aviation Authority of Nepal (CAAN), 31 international airlines are operating in Nepal. Similarly, 15 domestic companies, including nine fixed-wing and six helicopter companies, are also in operation.<br />
	<br />
	The prospects look bright with the private sector playing a leading role and investing billions in the industry. Buddha Air and Yeti Airlines have successfully proved their salt in the domestic market while internationally acclaimed companies such as Oman Air, Qatar Air, Jet Airways and Thai Air -- to name a few -- have also served the Nepali travellers well. Domestic airlines are all set to introduce some special packages to customers, international companies will also bring special offers targeting the Nepali New Year. For the time being, keep on guessing what offers domestic and international airlines may bring to attract travelers.<br />
	<br />
	<br />
	<img alt="liquor" height="312" src="/userfiles/images/2070-15.jpg" style="margin: 10px;" width="176" /><br />
	<br />
	<br />
	<strong>Liquor</strong><br />
	<br />
	There is a huge market for alcohol . The demand has been increasing each year due to the rise in household income, which comes from remittance inflows. There have been instances in some districts where most of the remitted money was spent on imported, high premium liquor.<br />
	<br />
	Both domestic and international brands have been doing their business in the Nepali market. Liquor is also a major source of revenue in the country. The overall business of restaurant and bar has decreased due to Mapase (a campaign against drunk-drive launched by Division of Metropolitan Traffic Police); but liquor business is still one of the evergreen sectors in the country.<br />
	<br />
	People had mostly negative perception about liquor in the Nepali society until some years ago. This perception has changed now and alcohol has become a part of daily life now. Whether it is a gathering or a grand party, it is not considered complete without liquor.<br />
	<br />
	Some famous liquor brands such as Antiquity, Ballentine, Royal Stag and Signature have already won the trust of middle class consumers. World-class brands such as Red Label, Black Label and Chivas Regal have also been doing good business in the Nepali market. It is for sure that many of us will be celebrating the occasion sipping of liquor according of our choice.<br />
	<br />
	<br />
	<strong><img alt="paints" height="231" src="/userfiles/images/2070-19.jpg" style="margin: 10px;" width="250" /><br />
	Paints</strong><br />
	<br />
	The paint market has thrived over the years, creating much space for paint companies to expand their market in the country. Rapid urbanisation, construction boom and growing awareness among customers have triggered the demand of paints, giving a leg up to the domestic paint industry, mostly joint ventures and subsidiaries of Indian multinational companies.<br />
	<br />
	The annual domestic demand for paints (including decorative and industrial categories) currently stands at around 40,000 metric tonnes, according to industry sources. The data released by Nepal Rastra Bank, there was a turnover of around Rs 4.10 billion in fiscal year 2011-12.<br />
	<br />
	Despite the slowed demand in the recent days due to recession in the construction sector, m a n u f a c t u r e r s observe that the market is growing. Demand of paint will never go down because a fresh coat of paint is always required even in old houses and people want to change the &nbsp;<br />
	colour to give a different look to their apartments and rooms.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>Housing</strong><br />
	<br />
	Nepal&rsquo;s real estate sector has been in an ailing state for three years now. The real estate and housing industry witnessed a speedy growth (which many say was an unnatural growth) until the Nepal Rastra Bank (NRB), regulator of the country&rsquo;s financial market, suddenly restricted banks&rsquo; lending to the sector in September 2010.<br />
	<br />
	The government planned to purchase houses and apartments for senior civil servants last year. The decision, could give a new lease of life to the cash strapped housing sector, is moving at a snail&rsquo;s pace. However, some positive indication of growth has been seen in the realty sector from the beginning of this year. According to real estate entrepreneurs and housing developers, this business has grown by 33 per cent in the first half of the current fiscal year, compared to the same period in the previous year.<br />
	<br />
	The New Year is expected to bring new hopes and new enthusiasm to the realty sector, opines secretary at Nepal Land ad Housing Developers Association (NLHDA), Bhesh Raj Lohani.<br />
	<br />
	<br />
	<strong>Computers</strong><br />
	<br />
	A study carried out by the Computer Association of Nepal (CAN) last year showed that the computer penetration rate in the country had crossed five per cent. The survey was carried out based on the record of import of computer monitors and branded laptops, according to CAN general secretary Narayan Neupane.The penetration rate at present may have crossed eight percent, he says, adding that the trend of using computers is on the rise since schools, health institutions, clubs and other social groups in the far-flung areas of the country have started using computers for their day-to-day activities.<br />
	<br />
	It is likely that the transaction of overall ICT products will double in the next few years. Internet penetration rate increased to around 23 per cent till mid- December, and the rise of Internet users will have a direct impact on the trade of computers, he claims. High competition among world class brands including HP, Dell, Asus, Compaq, MAC, Sony, Lenovo and Acer have not only contributed to lower the price, due to hard competition, but also have provided quality products to Nepali customers.<br />
	<br />
	&nbsp;</p>
<p>
	&nbsp;</p>
<p>
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;New Year is Definitely a High Season for Passenger Cars&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="sarik" src="/userfiles/images/SARIK.jpg" style="width: 150px; height: 144px; margin: 10px;" /><br />
	SARIK BOGATI<br />
	<br />
	Head of Marketing, Pooja International (authorised distributer of Volkswagen)</strong><br />
	<br />
	<br />
	<strong>Can you please tell us briefly the overall business scenario of your product in the first quarter of 2013?</strong><br />
	<br />
	The year 2013 seems to be very lucky for Pooja International and the automotive division of Vishal group. Talking about the Volkswagen Brand, we have very good starting with arrivals of fresh 2013 models of Polo and Vento from India. There are many updates in the features like bluetooth in steering control, auto Aircon in Polo, increased leg room, introduction of new colours in cars, new alloys and black headlamps. We have started receiving the New Tiguan, Golf and New Touareg, which are also catching up the market. As a corporate strategy, the automotive division of Vishal Group has expanded its wing in a new segment with acquirement of dealership of &lsquo;Kobelco&rsquo; construction equipment in February 2013.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter, i.e., April- June, 2013 as the Nepali New Year sets in?</strong><br />
	<br />
	New Year and spring season is definitely high seasons for passenger cars. We have so many bankers in queue waiting to upgrade to Volkswagen in this season. Moreover, we will have more cars coming in this quarter from both Germany and India. Now, we can supply the cars to the customers who have been booking and waiting for months. We are very hopeful of the next quarter.<br />
	<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are the main features of your products/brands?</strong><br />
	<br />
	Kobelco construction equipment definitely is an exciting brand and has amazing performance machines which we will offer this year. Moreover, we are expecting some new models and facelifts of Volkswagen coming from India this year.<br />
	<br />
	<br />
	<strong>Can you please provide the price ranges?</strong><br />
	<br />
	We really can&rsquo;t say the price now. But the price would be similar range at what we are offering now.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular especially in the next month: April (Baisakh)?</strong><br />
	<br />
	We would be more focused on branding.</p>
<p>
	&nbsp;</p>
<p>
	&nbsp;</p>
<p>
	<br />
	<br />
	<strong>&lsquo;Toyota Starts to Book New Product Etios Targeting Nepali New Year&rsquo;<br />
	<br />
	<br />
	<img alt="" src="/userfiles/images/SAHARA.jpg" style="width: 150px; height: 151px; margin: 10px;" /><br />
	<br />
	SAHARA KC<br />
	Executive Divisional Manager<br />
	United Traders Syndicate (UTS)<br />
	(authorised dealer of Toyota in Nepal)</strong><br />
	<br />
	<br />
	<strong>Could you please tell briefly the overall business scenario of the produt/brand?</strong><br />
	<br />
	After a hugely successful business year, Toyota now is facing a mild slowdown in terms of sales, which can be ascribed to the recent economic crunch and inability of Toyota to meet the existing demand. The first quarter of this year is almost gone by in the anticipation of launching our new product Etios.<br />
	<br />
	<br />
	<strong>What are the expected returns within the next quarter?</strong><br />
	<br />
	The next quarter is expected to bring a boom in our business with the launch of our highly awaited product Etios. As the Nepali New Year approaches, we will be accepting bookings for the car. Looking at the large number of inquiries about the product, we are expecting a lot of bookings prior to the launch.<br />
	<br />
	<br />
	<img alt="sahara" src="/userfiles/images/sahara1.jpg" style="margin: 10px;" /><br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are the main features of your brands?</strong><br />
	<br />
	As of now, we do not have any new product offering for New Year but we are expecting sales of the product that we have in our offering. Avanza, Hilux, Fortuner, Corolla, Yaris are a few products that we expect to sell more.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular?</strong><br />
	<br />
	Apart from our regular promotional campaigns and promotions for Etios that we will begin from the next month, the launching of Etios will be something the city has never witnessed before. We are focused on making the event an eye catcher for not only our customers and prospects but for anyone who gets a mere glimpse of the event.<br />
	<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;December to January is Considered a Dull Period&rsquo;<br />
	<br />
	<br />
	<img alt="rahul" src="/userfiles/images/RAHUL.jpg" style="width: 150px; height: 143px; margin: 10px;" /><br />
	<br />
	RAHUL DHANUKA<br />
	Brand Manager<br />
	Esprit Watch</strong><br />
	<br />
	<br />
	&nbsp;<br />
	<strong>How do you see the possibility of the business in the next quarter?</strong><br />
	<br />
	With the Nepali New Year approaching, people will certainly start feeling the heat of summer. The watch business is likely to rise because of the change of season. People tend to spend more on watches in summer than in winter. Moreover, the New Year will bring festive mood back. So, people will spend comparatively more than in any other time of the year. We also have the latest collections in store, so watch lovers can try out new collections that will certainly match the latest trend and fashion.<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are main features of your products/ brands?</strong><br />
	<br />
	We have several brands available at all our outlets. Most recently launched brands are Esprit and Pierre Cardin. The brands trendy and casual models. Few most sought other products and brands are: Fossil and Kenith Cole.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of these brands?</strong><br />
	<br />
	The price ranges from Rs 10000 to Rs15000.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products popular in the next month?</strong><br />
	<br />
	We have three outlets for our products and all of them are located in prime areas like Durbar Marg, City Center and Blue Bird Mall. We are using different branding and promotional strategies. We mainly focus on the print media like different magazines, newspaper, hoarding boards, etc. We have also started targeting our customers through social media like Facebook and Twitter. Fan pages on facebook have helped us a great deal to attract young mass towards our products.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Today is What Technology Stays on, Tomorrow is Where it Moves Ahead&rsquo;</strong><br />
	&nbsp;</p>
<p>
	<img alt="sachin" src="/userfiles/images/SACHIN.jpg" style="width: 150px; height: 148px; margin: 10px;" /><br />
	<br />
	<strong>SACHIN UDAS<br />
	Marketing Manager, Teletalk (authorised distributer of Colors Mobile)</strong><br />
	<br />
	<br />
	<br />
	Colors is one of the most popular mobile set brands in the country. It has full ranges of mobile phones from basic level to touch-based lifestyle phones, along with CDMA and hi-end smartphones. Colors is a reliable brand with one year of warranty.Colors has the largest network with 18 service centres from East to West. Colors operates after-service follow-ups to assure customers are satisfied with the products.<br />
	<br />
	Colors brand believes in value transferring. We have four major series of Phone: Fighter, Lifestyle and Touch, CDMA and X-factor series. Fighter series consists bar phones with basic features, which can play MP3/ MP4. Fighter series is very popular all over the country. Lifestyle and Touch Series offers multi media facilities like touch screen. Colors&rsquo;s has introduced smartphones under X-factor series. In less than a year, the company has taken good market share of smartphones.We will have entry level android phones, which we want in every teen&rsquo;s hand so that they can explore different apps that are useful in learning languages and also for other purposes. We believe that the android is the key for Nepali teens to experience and explore possibilities of technology.<br />
	<br />
	Colors&rsquo;s X-factor tablets will be soon arriving to the market. It will come in 7 inch and 8 inch screen sizes with 3G SIM compatibility.&nbsp; Colors brand believes that today is what technology stays on, tomorrow is where it moves ahead.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;New Year is Expected to Bring New rays in Summer Sale&rsquo;<br />
	<br />
	<img alt="achal" src="/userfiles/images/ACHAL.jpg" style="width: 150px; height: 164px; margin: 10px;" /><br />
	ACHAL AGARWAL<br />
	Director<br />
	JeansWest, Nepal</strong><br />
	<br />
	<br />
	<br />
	<strong>Can you tell us briefly the overall business scenario of your products in the first quarter of 2013?</strong><br />
	<br />
	The overall business scenario was very exciting during the first quarter. It has been two years since we introduced our brand in Nepal and people have responded well to the product.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter as the Nepali New Year sets in?</strong><br />
	<br />
	We expect a good sale during April-June since it is summer and people come to buy summer goods.<br />
	<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are their main features?</strong><br />
	<br />
	We have lots of products including T-shirts, half shirts, quarter pants, pants and summer jeans (for men and women) in the New Year.<br />
	<br />
	The main features of our brand are:<br />
	<br />
	a. Company controlled prices: This has become one of the major factors behind our brand to be so successful within such a short span of time. Our products are almost 30 per cent less priced than the similar kind of goods in the market.<br />
	b. Quality: JeansWest is known for its quality in Australia and worldwide markets.<br />
	c. Brand: JeansWest is a very big brand of Australia and so people know about this brand making it very easy for us to get established in the market.<br />
	d. Variety: At JeansWest, we have a very wide range of products.<br />
	e. Size and Fit: JeansWest products have been received well in the Nepali market because of their sizes and fittings for Nepali people.<br />
	<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of the same?</strong><br />
	<br />
	Price ranges from Rs 990 to Rs 4000.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular in the New Year 2070 BS?</strong><br />
	<br />
	Paper media and hoarding boards will be our main marketing strategies in the New Year.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Customer Satisfaction is a Must to Make Products Popular and Desirable&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="dilip" src="/userfiles/images/DILIP.jpg" style="width: 150px; height: 168px; margin: 10px;" /><br />
	DILIP KC<br />
	Sports Plaza Pvt Ltd<br />
	(Authorised distributer of Reebok, Rockport and Lee brands)</strong><br />
	<br />
	<br />
	<br />
	&nbsp;<br />
	<strong>Could you please tell us briefly the overall business scenario of products in the first quarter of 2013?</strong><br />
	<br />
	Sports Plaza Pvt Ltd covers Reebok, Rockport and Lee brands, which are one of the best apparel and footwear brands in the world. January 2013 sets in with winter at its peak and as the brand covers an entire range of winter apparels, footwear and accessories, we do not need to worry much about sales and acceptance of our products by our customers. These are world class products with the best designers putting in latest trends in fashion and comfort. They also involve new technologies in footwear and even in fabrics, not available in general.<br />
	<br />
	<br />
	<strong>How do you see the possibility of the business in the next quarter as the Nepali New Year sets in?</strong><br />
	<br />
	We are very optimistic about the business in the next quarter, when we will put our summer arrivals on display, welcoming spring summer with latest and the best in designs and the quality fabrics best suited for our customers. The lightweight footwear and air flow technologies are ultimate in comfort and style. We are sure of high sales volumes in spite of tough competition from other brands.<br />
	<br />
	<br />
	<strong>What are the main features of your products?</strong><br />
	<br />
	As already mentioned, Reebok is a premium sports brand always putting in highest standards of quality and workmanship, both on their footwear and sports apparels. The main features are light weight and best quality fabrics available in the industry with the latest technologies that goes into making them. To mention a few, the fabrics are play dry, which keep our body cool even in peak summer, zig fabrics which are proven to give back the energy dissipated from the body during workouts and exercising and the easy tone range &ndash; helping to tone the body muscles.<br />
	<br />
	Rockport is a trendy leather footwear range for men offering great style and comfort. Also the high technologies that go into Leather processing, The sole, and the workmanship required to make them. Lee is a casual fashion brand with best Denims and cottons available in the market. The designs, quality and price range has been well accepted in the market.<br />
	<br />
	<br />
	<br />
	<strong>Can you please provide the price ranges?</strong><br />
	<br />
	As there are many varieties of products, it would not be possible to cover the prices on this short space. However, if you want prices for some specific product range, we shall be glad to provide the same.<br />
	<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular?</strong><br />
	<br />
	We strongly believe that our customers&rsquo; satisfaction is the most desired strategy that would make our products popular and desirable. However, we can never undervalue the great cooperation and good wishes of our media friends from all publishing houses and advertising agencies, who have worked hard making great designs and offering us the best coverage available.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;We Want to Strengthen Laavanya Brand in the Coming Year&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="aditi" src="/userfiles/images/ADITI.jpg" style="width: 150px; height: 143px; margin: 10px;" /><br />
	ADITI BHATTARAI<br />
	Business Development Manager Laavanya Luxury Ayurveda</strong><br />
	<br />
	<br />
	<strong>Can you tell us briefly the overall business scenario of your brand in the first quarter of 2013?</strong><br />
	<br />
	This quarter has been significant for the company as we celebrated our first anniversary in February along with the commercial launch of our sales in the United States. This event has reinforced the strength of Laavanya as both national and international brand. We want to build on this perception and strengthen the brand further for the year.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter, i.e., April- June, 2013 as the Nepali New Year sets in?</strong><br />
	<br />
	April to June is a special season for all our products because we have special events like New Year and wedding season of Baisakh and Asadh. Our products make great gifts for occasions like these. Our cleansing products like the Royal Saffron Ubtan (known as Bukuwa in Nepali) have special significance on wedding rituals and can be used by the brides (and their families) for beautifying as well as religious purposes. Last year, this period brought us the best sales and business prospects in the entire year.<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are their main features?</strong><br />
	<br />
	Taking the season into consideration, we will be promoting our cleanser, face mask and moisturizers this quarter. The cleanser (Royal Saffron Ubtan) and Face Mask (Mukha Kantibarkdhak Powder) are designed for all skin types and are beneficial in windy season, especially in Kathmandu where the effects of dirt from the street impact the skin directly. These products gently remove dirt particles and leftover make up, can be used daily.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of those products?</strong><br />
	<br />
	Royal Saffron Ubtan-Rs 1250<br />
	Mukha Kantibardhak Powder-Rs 1250<br />
	Radiance Cream-Rs 1650<br />
	Deep Nourishing Cream-Rs 1950<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular especially in the next month?</strong><br />
	<br />
	We mostly focused on personal selling and word-of-mouth publicity this past year. In this quarter, we will be focusing on advertising through the print media and social media. We have used social media effectively in conveying the benefits of Ayurveda and our products and how and when to use them, we want to give continuity to that. We will also offer a special discount offer for New Year.<br />
	<br />
	&nbsp;</p>
<p>
	<br />
	<strong>&lsquo;Overall Business scenario is Good in the First Half of the Current FY&rsquo;</strong></p>
<p>
	&nbsp;</p>
<p>
	<img alt="bhesh raj lohani" src="/userfiles/images/bhesraj.jpg" style="width: 150px; height: 167px; margin: 10px;" /><br />
	<strong>BHESH RAJ LOHANI<br />
	Managing Director<br />
	Green Hill City Pvt Ltd</strong><br />
	<br />
	<br />
	<br />
	<strong>How is overall business of housing sector?</strong><br />
	<br />
	Green Hill City is the largest housing industry in Nepal. It will be developing around 800 units in 320 ropanies of land. As regarding the overall business scenario the product sellings are quite good in the first half of the current fiscal year. Out of 490 units constructed by the company, 130 units have been sold and ownership of 96 units had already been transferred.<br />
	<br />
	<br />
	<strong>What are the main features of Green Hill City&rsquo;s products?</strong><br />
	<br />
	We have two different products: acquiring land and constructing houses by consumers themselves and purchasing completed houses. Green Hill City is committed to providing quality services and best housing products to its customers. We have targeted all types of consumers ranging from the middle class to the upper class.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges?</strong><br />
	<br />
	The price of housing units and colonies constructed by Green Hill City ranges from Rs 6.7 million to 30 million.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular?</strong><br />
	<br />
	Till date we have been promoting our publicity strategies through newspaper advertisements, TV promos and hoarding board. The next campaign consist of a number of sales executive going the various corporate house providing the information about the products through direct marketing by the help of brochure and flyers.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Nerolac Produces Many Ranges of Products&rsquo;</strong></p>
<p>
	&nbsp;</p>
<p>
	<br />
	<img alt="rajendra" src="/userfiles/images/rajendra.jpg" style="width: 150px; height: 232px; margin: 10px;" /><br />
	<strong>RAJENDRA DESAI<br />
	Country Head<br />
	Nerolac Paints</strong><br />
	<br />
	<br />
	Considering the market&rsquo;s feedback, the paint market is opening and the season is starting after the winter. Cold weather is almost gone and we see a bright sun every day, which will help to increase the sales of paints and allied products. The construction activities are in full swing, these means an increased demands of paints. Paint sales in the first quarter will be much higher than in the last quarter, and it is expected that the trend will continue in the coming months. We will have 3 per cent more than last year. We have started producing various ranges of Nerolac products, along with existing range of Nepal Shalimar brands. We are keen to market super premium products both for exterior and interior use.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;ICT Market is Always Looking to Give Better and more Suitable technology&rsquo;<br />
	<br />
	<br />
	<img alt="" src="/userfiles/images/nabin.jpg" style="width: 150px; height: 160px; margin: 10px;" /><br />
	NABIN JOSHI<br />
	Assistant General Manager<br />
	Astral Computers Nepal Pvt Ltd</strong><br />
	<br />
	<br />
	<strong>Can you please tell briefly the overall business scenario of the ICT products in the first quarter of 2013?</strong><br />
	<br />
	The first three months seem good in terms of business prospects. Because the CAN InfoTech 2013 was held in the same quarter, the promotion of IT business was better compared to previous quarters. Due to CAN InfoTech, we were able to reach the end user as well as corporate customers. Therefore overall business scenario of ICT products looks bright.<br />
	<br />
	<br />
	<strong>How do you see the possibility of the business in the next quarter?</strong><br />
	<br />
	Along with consumers&rsquo; positive perception, ICT sector needs favorable and appropriate policies to grow. Despite of all above causes, the purchasing trend from organisations has increased. So, we are expecting the same situation, even with better possibilities in the next quarter.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make ICT products more popular?</strong><br />
	<br />
	Nepal&rsquo;s IT market is price driven. However, ICT products do not adapt to a single strategy for better publicity.<br />
	Apart from price, we also educate customers and suggest them the right product to enhance the productivity. Educating customers means building long term relationships, which enables to win their trust. In order to get more publicity about our products, we are trying to reach more and more customers, listening to their requirements and suggesting them the best option.<br />
	<br />
	<br />
	&nbsp;</p>',
			'published' => true,
			'created' => '2013-04-17',
			'modified' => '2013-07-28',
			'keywords' => 'new business age cover story news & articles, cover story news & articles from new business age nepal, cover story headlines from nepal,  current and latest cover story news from nepal, economic news from nepal, nepali cover story economic news and events,  ongoing  cover story news of nepal',
			'description' => 'Outlets of the world’s most famous brands have already started doing their business in Kathmandu providing consumers chances of more choices and selections. The powerful combination of sophistication in use of goods, changing lifestyle in the urban area and consumers’ access to information created by information and technology have brought about an unprecedented shift in the consumers’ brand use habit.',
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	(int) 8 => array(
		'Article' => array(
			'id' => '896',
			'article_category_id' => '40',
			'title' => '‘We Need To Develop Our E-commerce First’',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong><img align="right" alt="Sanjay Golchha, Golchha Organization" height="313" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_sanjay.jpg" style="margin:0 0 0 10px;" width="274" /><span style="color:#3ab0c4;"><span style="font-size: 22px;">'We need to develop e-commerce first'</span></span></strong></address>
<address>
	<strong><br />
	</strong></address>
<address>
	<strong>Sanjay Golchha</strong></address>
<address>
	<strong>Director</strong></address>
<address>
	<strong>Golchha Organization</strong></address>
<p>
	<strong style="text-align: justify;">What is an example of media convergence in Nepal due to the advent of new communication technologies?</strong></p>
<p style="text-align: justify;">
	Digital media is the most useful form of media for the advertisers. Online marketing has not been fully explored in Nepal. Although social media sites like Facebook have high usage in Nepal, advertisements on facebook are not very effective. Media convergence has only recently started making some impact. People do not understand the power of the digital media. Only international contents can be found in online ads, not the local content.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What has been the most useful communication technology convergence in the Nepali media?</strong></p>
<p style="text-align: justify;">
	To make use of communication technology in Nepal, e-commerce should develop first. It is not developing due to social and technical inefficiencies in Nepal. Online digital ads will be prominent on the Internet or on the websites only after we have a developed e-commerce business.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What has been the impact of media convergence on Nepal’s media industry?</strong></p>
<p style="text-align: justify;">
	The impact of media convergence will come slowly. This requires economic development and political stability in the country. This can provide a platform for the ecommerce businesses to develop more content. People are not using the online media to buy things online. Due to the poor financial situation of the country, people are not in a hurry to buy anything. They want to use their time to choose the products they want to buy. Another thing is, even if the people were interested in buying products online, the online payment system has not yet come into practice. Firstly, they cannot pay and secondly they cannot trust buying products online. Hence, there are many pending issues with regard to media convergence. First, the Nepali commerce and media industry should develop; the ads will follow later.&nbsp;</p>
<p style="text-align: justify;">
	<strong>How long shall it take to make a full impact?</strong></p>
<p style="text-align: justify;">
	The impact of media convergence can be seen soon. But, for this the Internet bandwidths should be cheaper and the Internet should be more accessible to the people. Online payment systems should also be developed and promoted. Due to the conservative financial system, online payment is difficult. Domestic payment systems should be prioritized and the international payment systems will automatically develop. The world is globalized today and lack of an online payment system is a major disadvantage to us. Businessmen should invest in e-commerce development. More pioneers are required. E-commerce websites like Thamel.com and Muncha.com are well established businesses. Airlines have also advanced in this sector. Buddha Air, Yeti Air and others as well have already started providing online reservation service to their customers.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What are the changes required in the media industry to adapt to the changes of media convergence?</strong></p>
<p style="text-align: justify;">
	They can also be explored for business development but this has not been done at all.&nbsp;</p>
<p style="text-align: justify;">
	If providing Internet on the phone brought a lot of profit to the mobile phone companies, then development of online payment system will be even more profitable. Nepal is a tourist destination. The tourism industry flourishes throughout the country. But, it is difficult for the tourists to learn more about Nepal before their visit. Tourism related websites are advertised in the international online media to attract tourists. However, when they want to make a hotel reservation to ensure that they already have a place to stay before visiting the country, it is not possible. Similarly, products like coffee and carpets that are exported abroad cannot be advertised properly. The major reason for this is the lack of an online payment system.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What can the advertisers do in order to benefit from the changes of media technology convergence?</strong></p>
<p style="text-align: justify;">
	We need to invest in e-commerce. This can help local businesses to reach customers around the world. Lack of an online payment system is a loss for tourism-dependent <strong>businesses like hotels and travel agencies as well as the exporters. The payment taking mechanism is difficult which is why the online advertising is not fully developing.</strong></p>
<div style="background:#fcf88d;padding:5px;">
	<p style="text-align: justify;">
		<strong>The Paradigm Shift</strong></p>
	<p style="text-align: justify;">
		There has also been a shift in terms of media’s target consumers. Traditionally, the primary market was the target of media companies. The primary market included television viewers, radio listeners, website surfers, and newspaper and magazine readers. While the secondary market includes the marketers, the competing companies and other media as well. There has been a convergence in these two groups as now they both are targeted equally by the media companies.&nbsp;</p>
	<p style="text-align: justify;">
		Sanjay Golchha is also involved with Mindshare Nepal, which is a digital marketing company, the first of its kind in Nepal. It is the authorized agent for GOOGLE in Nepal and works in close relation with the businesses companies of Nepal. They are involved in Search Engine Marketing (SEM), which is the biggest source of online advertisements. They are also focusing upon social engineering, advertising the tourism and travel websites as well as promoting export products online. Currently, their major focus is upon providing email-marketing services to the local businesses. &nbsp;Mindshare Nepal Pvt. Ltd. collaborates with two companies who are experts in Software (IT Nepal) and marketing (Linez). Email marketing allows the businesses to reach thousands of people with a single message and see their response instantly.&nbsp;</p>
</div>
<div>
	 </div>',
			'published' => true,
			'created' => '2013-03-24',
			'modified' => '2013-03-24',
			'keywords' => '',
			'description' => 'The impact of media convergence can be seen soon. But, for this the Internet bandwidths should be cheaper and the Internet should be more accessible to the people.',
			'sortorder' => '778',
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	(int) 9 => array(
		'Article' => array(
			'id' => '895',
			'article_category_id' => '40',
			'title' => '‘Companies Should Focus On Building Brands, Not On Selling Units’',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong><img alt="Abhaya Pandey" height="254" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_abhaya.jpg" width="250" /><br />
	</strong><strong>Abhaya Pandey</strong><strong>Advertising Professional</strong></p>
<p>
	 </p>
<p style="text-align: justify;">
	<strong>How is media convergence affecting Nepal’s advertising industry?</strong></p>
<p style="text-align: justify;">
	Online Media is an example of the impact of Media Convergence in Nepal but it has not been able to make a significant impact yet. There are very few Internet users. We are still relying on the digital media as the prominent source of advertisement. &nbsp;</p>
<p style="text-align: justify;">
	<strong>How has Social Media Education (SEM) changed over the years?</strong></p>
<p style="text-align: justify;">
	While social media education advertisements were mostly like BCC (Behaviour Change Consumerism) previously, today ad literacy has increased. This also requires more ad communication experts to convey social educational messages in an entertaining manner. The challenge today is not only giving information but also persuading consumers to buy the product or the message. While traditional media required information education, today information has to be conveyed through entertaining ads that can easily grab the people’s attention. Education is possible through entertainment only. Functional value is changing. Humour, fear campaigns, sensationalization etc should be embedded into ads to make them both entertaining and educational. Only educational ads will make people switch between TV channels. The government, NGOs and INGOs should be more responsible towards SME.</p>
<p style="text-align: justify;">
	<strong>How is the “Brand Personality” of a company reflected in its advertisements?&nbsp;</strong></p>
<p style="text-align: justify;">
	Sixty per cent of the total cement consumed in Nepal is produced in Nepal; only the remaining 40 per cent is imported. This clearly suggests a lack of competition in the domestic market. Many companies are trying to establish their brand names in the cement industry but special emphasis has not been placed in making better advertisements for those brands. The richest organizations of Nepal, the banks are limited to the urban areas and are yet to reach the villages. Hence, there is not much competition in the banking sector as well. Brands are classified in terms of the advertisements that they demand. Clients should think long-term. They should focus on building brands and not only on selling units. The market of instant noodles can be called competitive and this is reflected in &nbsp;their advertisements as well. People can easily associate more with the noodle brands than with others.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What is the biggest challenge in the advertisement sector today?</strong></p>
<p style="text-align: justify;">
	The biggest challenge for Nepali business companies is to use advertisements to grab the people’s attention first and then to convey the message of the brands. Some ads are very descriptive which makes them absurd instead of creative. This can lead to a disconnection between the brand message and the advertisement message. It’s only a tool. Ideas combined with technology are necessary to create better advertisements and awesome brand images. The market is changing from supply-oriented to demand-oriented. More competition and professionalism is required in the corporate houses. Only after these basics are met, the companies can focus on creativity and design of their brands. If the brands and production companies start focusing upon brand image today, they will be able to stand out even 25 years from now. Glossy ads are not always creative ads.</p>
<div style="text-align: justify;">
	 </div>',
			'published' => true,
			'created' => '2013-03-24',
			'modified' => '0000-00-00',
			'keywords' => '',
			'description' => 'Online Media is an example of the impact of Media Convergence in
Nepal but it has not been able to make a significant impact yet.  There are very few Internet users. We are still relying on the digital media as the prominent source of advertisement.',
			'sortorder' => '777',
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	(int) 10 => array(
		'Article' => array(
			'id' => '894',
			'article_category_id' => '40',
			'title' => 'Media Convergence: Impact On Business',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	<span style="text-align: justify;">Media convergence is a theory, and subsequently a practice, in communications where every mass or niche medium eventually merges with each other to the point that they are indistinguishable from each other, creating a new medium from the synthesis, due to the advent of new communication technologies. With the advent of new medium over the Internet and the mobile, media convergence is now an increasing reality in the Nepali media and entertainment industry.&nbsp;</span></p>
<p style="text-align: justify;">
	A prominent example of media convergence in Nepal is the online media. It has had a significant impact upon the conventional print and broadcasting media. Globally, it has proved to be very influential. In the USA and other developed nations of the world, everyone uses advanced technologies such as &nbsp;iPhone, Blackberrys and other gadgets that help them stay updated every second. People do not wait for the next day to read the newspapers. The online news portals get updated every minute with new news flowing in. According to Suresh Prasad Aacharya, Academic Advisor at the Shepherd College of Media Technology, such an example can also be seen in Nepali radios. Radios provide news bulletins every hour. The same news is followed by the televisions and is viewed by the audience in the evening.&nbsp;</p>
<p style="text-align: justify;">
	The online portals also update the news. Next morning, almost the same news is printed in the newspapers. Again, the radios conduct programmes in they which repeat the same news they broadcast a day ago. Hence, a cycle of convergence can also be seen in Nepal as the news reports get reproduced again and again by various forms of media. This is beneficial to the media consumers as they can stay updated through various forms of media. But this process weakens the media houses. Reporters can also benefit from this cycle. Most of the print media located outside the valley use online sources for the news. &nbsp;</p>
<p style="text-align: justify;">
	<strong>Challenges in Convergence</strong></p>
<p style="text-align: justify;">
	While the industry at large is excited about media convergence, it also has its share of concerns. The unanimous one is the lack of adequate bandwidth. The bandwidth cost is too high and needs to be brought down drastically. In Nepal, Internet usage is very low. The fact that 18 per cent of the population uses the Internet is exaggerated. Hence, this makes it difficult for the media companies to use the Internet to communicate with their audience. Only 5-6 per cent Nepalis have been able to make effective use of the Internet. &nbsp;In Korea, there are half-a-million subscribers who receive 11 channels live on their mobiles. Only when there is enough bandwidth, can the business be ramped up.</p>
<p style="text-align: justify;">
	The other challenge is educating consumers to use the various new media. The latest technologies such as HD camera and the latest software are not being utilized to the full extent. &nbsp;Though we capture advertisements in HD (High Definition), it is shown in SD (Standard Definition). This has been making a little difference in quality but the full potential of technology remains unexplored. Consumers here have some access to the latest technological goods but consumer education for their proper usage is not being encouraged. The industry will not grow unless the consumer is educated and aware of the available technologies and their usage.</p>
<p style="text-align: justify;">
	Apart from reaching consumers at various touch-points through convergence of the media, companies are also looking at it as a media to cater to the individual needs of consumers. And for this, the need of the hour is to generate adequate content. The Nepali media lacks the competition to generate adequate content. Producers are not compelled to make better advertisements. Advertisements are reflections of the competition among the brands. The clients want only glossy ads. They have a conservative mentality, as they want to stay 125 per cent secure. They prefer traditional, tried and tested methods that are still selling. Bringing creativity in media and advertisements requires more courage and clients by nature want security. Content availability has not kept pace with the changing consumers. Content generators have to generate enough to cater to individual tastes.&nbsp;</p>
<p style="text-align: justify;">
	Another perspective to the challenges is the industry - one where companies need to be more and more competitive in their marketing and product strategies. For this, they need to constantly innovate new products and therefore, reallocate an increasing amount of resources to research and development. Looking at the TV commercials in Nepal, one can easily see the lack of competition to generate adequate content Most of the commercials are that of FMGC (Fast Moving Consumer Goods). These markets are somewhat competitive and thus they focus on generating enough content to attract their consumers. However, for the products with uncompetitive market, the need to make the extra effort is not felt. This can result in the lack of contents in media. As more companies compete, the gestation period for newer products also decreases with each product life cycle. Companies should not only concentrate on selling units but also on creating a brand image.</p>
<p style="text-align: justify;">
	Finally, the lack of multi-skilled professionals in the newer arenas of business makes it difficult for the company’s old guard to let go of draconian or obsolete practices. This ultimately leads to turf wars over domain control. Convergence along with technological advancements has brought a tough competition in the media market. However, the level of seriousness is still very low. Acharya shares, “There is stiff competition &nbsp;to be the first to give the news to the audience but the accuracy and credibility of the news is lacking.” The skill demanded by Media Convergence is not being provided. He further says, “A computer literate media person is not good enough. We are using computers as typewriters and to get access to news only. Modern forms of technology should be better utilized. More creativity can be presented by using them which is not being done”. Nepali media is not fully aware about media creativeness. “Media are aware but not serious because they use online media for their convenience right now but they are not making long term assessments,” he says. In a period of 10 years, only the fittest will survive. His only request to media editors and directors is that they should stay updated with latest trends in media through training or orientations. &nbsp;</p>
<p style="text-align: justify;">
	<strong>Market and Technology Convergence</strong></p>
<p style="text-align: justify;">
	By plotting time against portability and interactivity and at the same time, selected parameters that might be called the benchmarks of technology progress namely moving image, computing, voice communication and games, we can get a historical perspective as well as deduce where the combined technologies are headed.&nbsp;</p>
<p style="text-align: justify;">
	However, in this case of mapping, the word convergence is never intended to suggest replacement (i.e. not everything is moving to one entity or point). All of the elements on the charts are still in existence and, except for VHS and DVD, will be around for a good while. We also see ‘divergence’ of media forms as it morphs across a sea of devices that continue to grow, layer upon layer.&nbsp;</p>
<p style="text-align: justify;">
	All technology makers and marketers would like to know what the next will be. In the portable domain will we always have separate phone and serious gaming device? We are already seeing the merging of the phone, organiser and media player (4GB phones are already in the market) – given you can dock these portable devices to the larger screen, carry all your content and that they can receive high definition TV, do we need fixed devices at all?&nbsp;</p>
<p style="text-align: justify;">
	<strong>Technology Convergence in Nepal</strong></p>
<p style="text-align: justify;">
	iPhone can be used in Nepal but it cannot be fully utilized. The phone clearly denies the user an access to its online stores by saying that the service is not supported in the region. This is due to the lack of an online payment system. On the contrary, Nokia phones are developing local contents for Nepal. Microsoft also provides Nepali language fonts for usage. However, the customers can use only the free services and not the priced contents. This can result in slow usage of technologies also. The telecom companies should be involved in this business. Both Ncell and NTC are providing mobile Internet service. This helps the users to use more social entertainment sites and random online contents but making full use of the latest technological innovations is difficult. Ncell has come out as the market leader with its gorgeous advertisements and user-friendly services. However, the customers want more.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Convergence of Understanding, Practicing and Innovating</strong></p>
<p style="text-align: justify;">
	Increasingly, one can observe a definitive trend in the convergence of understanding, practicing and innovating in the competitive marketplace where each participant is eying the largest chunk of the pie. Understanding the needs of the consumer has taken on a new importance with extreme segmentation and fragmentation in the marketplace. Identifying this need and creating a new product or service to fill this gap has gained prime importance, more so akin to a rasion d’être for the companies. From high value-high involvement products like home loans and automobiles to low value-low involvement products like detergent powders and toothpastes to soft drinks, companies are increasingly spending huge amounts of money to understand the patterns and motivations of the consumers for selecting, purchasing and using a certain brand.&nbsp;</p>
<p style="text-align: justify;">
	Even more important, the brand association that the consumers make with a certain brand can make or break the brand equity of a company’s product and the difference between success and failure of the product in the market. A constant drive to innovate and come out with better products is reflected in the ever-increasing amounts of R&amp;D spending of the companies. For example, high technology products like Nokia’s mobile handsets are made based on a constant feedback on usage and understanding of mobile phones by the customers. This has led to the incorporation of higher levels of innovation and user-friendliness in the next handset made by Nokia.</p>
<p style="text-align: justify;">
	A new concept on the horizon is co-creating value. This happens between the consumer and the manufacturer. The manufacturer actively seeks the cooperation of the consumer for creating new products.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Convergence of Creativity/Design with Technology and Business Sense&nbsp;</strong></p>
<p style="text-align: justify;">
	It wasn’t a long time ago when even the top copysmiths of advertising like Neil French used to write copy for ads and fit them in typesets for printing. Nowadays, even a copywriter in a small agency in a small town will type out the copy quickly on the computer and the graphic designer will fit it into the ad’s layout and send out the soft copy to the newspaper for printing. Technology innovation from typewriters to computers has made this shift possible. A school student with a typical Pentium desktop computer has, at his disposal, more computing power than NASA had when it sent the first man to the moon. The great enabler in this case, technology, is progressing with such rapid pace that the latest, most cutting-edge technology is rendered almost outdated within a few months of its release. Creative visualisers using advanced software like Adobe Photoshop and CorelDraw are daily creating breathtaking graphical masterpieces that would have taken even a Leonardo da Vinci months, if not years, to create.</p>
<p style="text-align: justify;">
	Convergence in technological standards like image formats (jpegs, gifs, etc.), audio-video formats (mpeg, avi, etc.), audio formats (mp3, wma, etc.), and so on, combined with interpolability and compatibility to use, share and transfer this data (USB, flash drives, DVDs and other optical storage) has created a powerful technology-design combo that professionals across the world are using in physical form as well as virtual form (cyberspace – Internet). Add to this, the keen entrepreneurial mind of a businessman and you have technology monoliths like the Times Group and others like AOL-Warner, Sony and Apple amongst many others who dominate the commercial landscape. Convergence is changing the way people live their lives on a daily basis.&nbsp;</p>
<div style="text-align: justify;">
	<div>
		<strong>Convergence of Classroom (Brick &amp; Mortar) with Internet (Click &amp; Portal) and Learning by Doing (Experiential): Experiential Brick and Portal&nbsp;</strong></div>
	<div>
		 </div>
	<div>
		<img alt="Midas EClass" height="86" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_midas_class.jpg" width="217" /></div>
	<div>
		Traditional classroom model has been in an evolutionary phase ever since technology innovations have made networking possible. Satellite communications like VSAT have enabled hundreds of thousands of students across the world to virtually attend lectures. The University Grants Commission (UGC) has empowered students in India because of this education and technology convergence. In professional courses, the emphasis has always been on practical knowledge rather than just theoretical inputs. The value addition to the professional skills development is far more when students are exposed to theories and their practical applications. Added to this is the new dimension of Internet learning. Numerous universities, colleges and institutes, especially in Western Europe and North America, are now offering degree courses through the Internet. This dissolves all cultural, geographical and social barriers for people who cannot afford the time and/or money to attend full time courses in foreign countries. The effective combination of these three models of learning- traditional classrooms, Internet and practical experiences, has become necessary for the students of today to become successful professionals of tomorrow.&nbsp;</div>
	<div>
		 </div>
	<div>
		Nepal is moving towards using technology for education, replacing the traditional “Chalk and Talk” method. Midas Education, a pioneer in the development of ICT (Information Communication Technology) in the education sector, encourages interactive teaching and learning. Students make use of PowerPoint presentations and other IT tools to enhance their skills and be prepared for the modern world. To bring a drastic change in the education sector, growth of ICT is very important. Information flow is unavoidable today due to the Internet and students are using GOOGLE for their education along with textbooks. The next challenge for Midas Education is to take ICT to the villages but as anyone can imagine, it is not an easy task. Use of ICT increases accuracy and quality of education and saves valuable time. Thus, ICT is necessary to modify the existent education pattern and to develop it.&nbsp;</div>
	<div>
		 </div>
	<div>
		Initially, it is difficult to use a new technology and learning it might take some time. But, as soon as we get used to it, there are only benefits to enjoy. Technology makes life comfortable and fast. The real beneficiaries of technology in Nepal are the students. Technology has been making their lives easier. They can easily grasp vague concepts. They do not need to mug up their course books these days; they have a chance to present their creativity. Along with the students, teachers are also benefiting.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in Media Consumption &amp; Media Buying</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		There was a time when you had simple choices to make – like choosing one newspaper from the three or four available, one radio station, one television station that broadcast only in the evenings, a couple of magazines from half a dozen available and so on. As the market kept segmenting and fragmenting, we now have thousands of radio stations to choose from with WorldSpace, Star TV itself telecasting more than half a dozen channels round the clock, there are more than a couple of dozen newspapers to choose from, hundreds of magazines to choose from and the story does not end there. With the advent of newer technologies, we now have newer channels of communications like mobile, Internet and direct-to-home television along with exponential storage capabilities on optical media like CDs and DVDs. Today, a typical consumer is bombarded with more than 1,000 messages per day. Marketers are finding newer ways and means to target the consumers.&nbsp;</div>
	<div>
		 </div>
	<div>
		One limitation for media consumption and media buying for Nepali consumers comes from the frequent load-shedding. This problem also makes an impact on the convergence cycle. The current trend is that the media houses are using all forms of media from print to radio to TV to online portals. One form of media is subsidizing the other. During the winter season, when the load-shedding is at its peak, advertisements in the TV decrease significantly to only 25 per cent as compared to the summer season. However, while the TVs are suffering from losses, the ads in the radio increase. Thus, radio subsidizes TV. Image Channel initially owned two TV stations: Image Channel and Image Metro. Now, it has replaced Image Metro with a new radio station, Image News, while the already existent Image FM still exists. This is an example of merging different types of media in one window, which is possible due to media convergence.&nbsp;</div>
	<div>
		 </div>
	<div>
		Another example of convergence in media consumption is the way in which consumers actively hunt for information. 3G mobile handsets are designed for high speed Internet connections and the user opts to use them in a variety of ways; like checking the online navigation to watch out for traffic jams, weather forecasts, locating the nearest fuel station, hospital or even a restaurant; everything is possible with the mobile handset. It also backs up as a personal information manager (PIM), a music player, a camera and a portable gaming device. Internet usage on the phone is aiding to media consumption but many people cannot afford it.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in Media Ownership</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		A massive diversification of media, thanks to the Internet, materialized by millions of websites, fora, blogs and wikis is taking place. That evolution, often labelled citizen journalism or citizen media, makes it possible for practically everybody to be a media creator, owner and actor, instead of a passive user.&nbsp;</div>
	<div>
		 </div>
	<div>
		With the technological advancements, convergence is expected to take various new forms. One form of media subsidizes the other and this poses a risk of developing a media tycoon. Currently, the Kantipur Media Group can give a run to the state media monopoly. It has an online news portal, a TV channel and radio broadcasting stations along with print media of daily and weekly newspapers, and monthly magazines. It is also considered the fastest and most reliable source of news. This has all been possible due to the proper utilization of technology.&nbsp;</div>
	<div>
		 </div>
	<div>
		Some of the largest media conglomerates in the world include American Media Inc., Bell Globemedia, Bertelsmann, Canwest Global, NBC Universal, Hearst Corporation, Lagardère Media, Liberty Media, News Corporation, Grupo PRISA, Rogers Communications, Sony, Time Warner, The Times Group (distinct from Times Newspapers of News Corportation), Viacom (owned by National Amusements), CBS Corp (also owned by National Amusements), and The Walt Disney Company.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in the Interests of Dual Markets&nbsp;</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		As more and more companies across industries look at multiple media platforms, especially the digital media, it is also emerging as a revenue-earning model for most of them. Also, e-commerce is growing rapidly and a host of companies are setting up online shops across portals.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Two sides of Media Convergence</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		With freedom, come the responsibilities. Media convergence has made a positive impact upon the advertisers. They only need to buy a small space in the websites and their ads get displayed 24 hours a day for as long as they want. The ads on the TV and newspapers last for a shorter period and are comparatively more expensive than the online ads. The design of the advertisements can also be changed from time to time. Also, the growing trend of media houses trying to use all forms of broadcasting media and print media makes it possible for the advertisers to negotiate rates. Their marketing is now more cost effective than before. They can easily use different tools of media and show their advertisements to their consumers through websites, TV, radio, as well as newspapers.</div>
	<div>
		 </div>
	<div>
		The Interim Constitution provides publication and broadcasting freedom to media but again imposes certain restrictions that allow the media to enjoy only the relative freedom. The online media however does not follow these rules and regulations. Online media has no monitoring system and in today’s world, the flow of information is difficult to stop. Hence, news that can be harmful should be stopped from spreading.&nbsp;</div>
	<div>
		 </div>
	<div>
		The definition of media is not the same as it was a decade ago. Facebook is an example of this. This new social media has influenced us largely. Now, every citizen is a reporter as he or she can constantly update news through Facebook. The news about Paras Shah getting a heart attack was published in the Facebook before any other media houses could print or broadcast it. Technology is responsible for this. While 10 years ago, technology turned the world into a global village, today it has changed the world into a global family. If a person in Nepal gets married today and updates his photos on Facebook, his friend in the US can see the photos. This ignores the geographical boundaries and aids in sharing cultures between people of different nations. Thus, it has been making a positive impact worldwide.&nbsp;</div>
	<div>
		 </div>
	<div>
		When the Royal Palace Massacre took place in 2001, &nbsp;a rumour was spread saying that somebody had mixed a poison in the water coming from the Water Supply Tank in Sundarijal. That was a time when people had no other forms of communication except for the landline phones at their homes. If that was enough to discourage many people from drinking water inside Kathmandu valley, we must think how effective can such rumours be today. We have all the powerful tools of communication from mobile phones to the Internet and it will take only seconds for such rumours to spread. &nbsp;Hence, with media convergence, self-regulation is required. People are required to be more responsible. Ill-intended propaganda and rumours should not be published.</div>
	<div>
		 </div>
	<div>
		<strong>Future Impacts</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		It is certain that over the next five years, technology will not remain the same. Newer versions will be available that will bring about more revolutionary changes. Hence, impact is a vague word in future terms. With changes in technology, the working processes will change which will provide the necessary opportunities towards beneficial transformations. The use of the latest technology produces beneficial products but education regarding technology is a limiting factor for a country like ours. With around 50 per cent of the graduating population having some form of knowledge regarding Information Technology (IT), it is not an impossible challenge. However, the business owners and leaders have the responsibility of encouraging this population for increased use of IT. &nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Media Education: Need for a Paradigm Shift</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		<img align="left" alt="Media Education" height="139" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_media_education.jpg" style="margin:0 10px 0 0;" width="200" />The world today is in the midst of one of the most dramatic technological revolutions in history. It is effecting changes in everything ranging from the ways we work, communicate commerce and spend our leisure time. The technological revolution which is underway centers on computer, information, communication, and multimedia technologies and may be seen to be the beginnings of a knowledge or information society. In such a society, education has a central role in every aspect of life. The proliferation of communication-information technologies poses tremendous challenges. It compels educators to rethink their basic tenets and to deploy the media in creative and productive ways. It forces them to restructure ways of learning-teaching to respond constructively and progressively to the technological and social changes that we are now experiencing.&nbsp;</div>
	<div>
		 </div>
	<div>
		Midas Education has been contributing to the development of ICT for education for about 12 years now. This continuous growth of Midas comes from continuous positive responses and moral support they got from their customers. Just like the processors developed in recent years from Pentium IV to i7, adding more layers in their newer versions, Midas has also been adding layers in their work to promote the use of ICT in the education sector. &nbsp;Raju Baniya, Business Manager of Midas Education, says, “This has improved our results year on year. We started with making self learning CDs and now we are trying to transform the class rooms.</div>
	<div>
		 </div>
	<div>
		As a consequence of information super highway and communication technologies, media and communication education have undergone almost unbelievable changes. The old lines between disciplines are becoming obsolete. The work of professional communicators is undergoing a dramatic change. Resultantly, there are likely to be very few belonging to one discipline which might be conversant with all forms of media in the days to come. With such metamorphosis of the professions underway, it is a real challenge to prepare students for successful professional careers in the era of convergence and connectivity of the variety of media.&nbsp;</div>
	<div>
		 </div>
	<div>
		In an era characterized by convergence of technologies the need for skilled media professionals who understand the foundation, both ethical and practical, from which they need to work, becomes even more critical. But without adequate training in new media skills, the goal will remain unachievable. This crisis in media requires to be addressed in the class room where young professionals are molded and sculpted. But to meet the needs of the fast growing media industry, an ongoing training is vital to ensure that those working in the field have to grow and develop. This entails broadening, updating and upgrading the core component of the media education at various levels.&nbsp;</div>
	<div>
		 </div>
	<div>
		What media students today need is nothing short of a leading-edge education suited to the needs of networked globalised industry. This would involve greater accent on fundamental concepts, values and skills needed to prepare them for communication careers commensurate with unprecedented changes. They need be fully equipped to understand the whole of communication scenario, be able to solve problems and imbibe the ethical and legal implication of media and communication which will let them be comfortable with innovation and working in concert with their peers. The object of the new media education is to prepare students for leadership roles in their professions and in their communities.&nbsp;</div>
	<div>
		 </div>
	<div>
		With a view to achieving the object of quality media education, the institute of Mass Communications are in dire need of reconfiguring and updating their curriculum to produce graduates who are prepared for future leadership roles in the media and communication industries and who are able to communicate across disciplines and in multiple media formats. This for providing students with strong core content in critical thinking, research and analysis, information gathering, writing, graphics and design, and law and ethics and the latest media technology and skills. It is not always possible for teachers to take students to lab to conduct required educational activities. Similarly, the task of taking students for field visit for practical knowledge is also not possible every time. In this context, the MiDas eCLASS offers audio-visual contents that complement the lab activities and field visit to enable the students to gain real-life experience.&nbsp;</div>
	<div>
		 </div>
	<div>
		The media education departments must offer to their students fully computerized reporting and editing classes, and create totally digital classroom and laboratory systems. They must orient themselves to revise their journalism curriculum and always be ready to undergo continual adjustments in response to changes in the profession. Far from print and broadcast sequences running separate, as is the case today, students in the two sequences need to plan news coverage together and work together in the labs. Tomorrow, it is quite likely that the sequences might disappear and students will be required to work seamlessly on stories for print, electronic media and the Internet – or whatever systems will exist in the future.&nbsp;</div>
	<div>
		Same is the case for students of marketing communications who need to integrate the different tools of branding and marketing: advertising, public relations, event management, digital marketing, direct marketing, etc, before specializing in one functional area.</div>
	<div>
		 </div>
	<div>
		For entertainment media students, it is significant to integrate skills for the entire entertainment industry: from television to cinema, from radio to digital entertainment, from events to musicals, etc.</div>
	<div>
		 </div>
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			'description' => 'With the advent of new medium over the Internet and the mobile, media convergence is now an increasing reality in the Nepali media and entertainment industry.',
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			'title' => 'Insuring Nepal’s Aviation Risks',
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			'summary' => null,
			'content' => '<p>
	<strong>By Sushila Budhathoki</strong></p>
<p>
	<img alt="Cover Story February 2013" height="329" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013.jpg" width="550" /></p>
<p style="text-align: justify;">
	<span style="text-align: justify;">“The higher the risk, the higher the potential return,” goes a popular saying. The economic logic is however that the profit is higher when risks are minimized. And there comes the insurance business to help the other businesses to reduce risks. In the process, both insurance companies and their business clients become happy. But this does not seem to be the case in aviation portfolio of Nepali insurance companies. &nbsp;Although aviation insurance is a high profile business in Nepal, it happens to be one of the weakest portfolios for most insurance companies in terms of profit. The aviation insurance business looks good in terms of premium collection but there is hardly any profit.&nbsp;</span></p>
<p style="text-align: justify;">
	The reason is: the insurance companies providing aviation insurance have to pay a high amount of premium – more than 99 per cent at times - to the reinsurance companies abroad. In fact, the companies are sustaining their aviation insurance business from the commission they get for the premiums paid to the foreign reinsurers. Mahendra Shrestha, Managing Director of Himalayan General Insurance, says, “Whether it’s profit or loss, it goes to the reinsurance companies. We (local insurance companies) are just the intermediaries. And if we fail to reinsure, we cannot sustain the operation. So, we have to depend on reinsurance companies abroad. There is no other choice.”According to Shrestha, some insurance companies are paying up to 99.97 per cent of the premiums collected to the reinsurance companies. “It has been a non-profit business for even most of the reinsurers who have only two choices - walk away or keep doing business at high premium rates to recover previous losses,” he adds.&nbsp;</p>
<p style="text-align: justify;">
	A three-year data (From 2009/10- 2011/12) of Beema Samiti, too, depicts the pathetic condition of Nepali insurance companies in aviation portfolio. During this period, only a few companies could make some profits which however, is paltry (See table 1). Rameshwor Thapa, President of Airlines Operators Association of Nepal (AOAN), says, “Since this is a highly regulated and risky business, there can be loss or profit and the clients also contribute in both these factors.” There are altogether 25 insurance companies including 17 non-life insurance companies in Nepal. Among the non-life insurance companies, seven &nbsp;deal in aviation insurance (See table 2). Nepal insurance Company Ltd and Neco Insurance which were doing aviation insurance previously have pulled their hands from aviation portfolio now.</p>
<p style="text-align: justify;">
	Lack of domestic reinsurance companies and low retention capacity of Nepali insurance companies has resulted in huge amount going abroad as remittance premium. The Nepali airlines are paying around USD 8-9 million premiums to the insurers yearly. The Nepali insurance companies retain 0.5 per cent of this and send the rest to the reinsurance companies.&nbsp;</p>
<p style="text-align: justify;">
	Dip Prakash Panday, CEO of Shikhar Insurance, says, “The way our aviation business has been exposed, we cannot afford the risks. Who will bear the risk if some big loss occurs?” Panday asks, adding, “We are not sending money, we are transferring the risk. The &nbsp;companies are still in profit because the money is flowing in from the reinsurers abroad as commissions. Since they agreed to take the risk, they bear the loss as well, when it happens.” Shikhar Insurance, &nbsp;one of the major players of Nepal’s aviation insurance business earned Rs 10.5 million as reinsurance commissions last year.&nbsp;</p>
<div style="padding:10px; background:#f4f3e6;">
	<strong>Nepal’s First Aviation Insurance Summit&nbsp;</strong></div>
<div style="padding: 10px; background-color: rgb(244, 243, 230); text-align: justify; background-position: initial initial; background-repeat: initial initial;">
	<img align="left" alt="Aviation Insurance Summit" height="173" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(2).jpg" style="margin:0 10px 0 0;" width="300" />Held In January, an ‘Aviation Insurance Summit’ was held in Kathmandu where all the stakeholders including the reinsurance companies participated. The summit brought about a fresh wave of optimism in Nepal’s aviation insurance sector. Mahendra Shrestha, MD of Himalayan Insurance, who was also in the organizing committee says, “The Summit brought local stakeholders, including operators, regulatory bodies, insurance companies and banks as well as key players in the regional and global aviation insurance industry including underwriters and reinsurance brokers under one roof. It gave the Nepali stakeholders a global perspective on our current situation as well as access to the expertise of visiting delegates.” He further adds, “After the summit, all the delegates expressed that they found it to be a helpful introduction to the Nepal aviation insurance market and that it helped them take better decisions about supporting it.”</div>
<p style="text-align: justify;">
	 </p>
<p style="text-align: justify;">
	Airlines insure their fleet according to the value of the aircraft. The reinsurers charge different premiums depending on the type of aircraft, experience of the pilots and engineers, infrastructure, equipment, management facilities and age and the value of the aircraft. Aviation insurance coverage is categorized into the following types: Hull, War, Allied, Perils Insurance, Third Party Liability Insurance, In-flight insurance, Passenger liability insurance etc. The passengers are insured at USD 20,000 each and crew member at USD 40,000 each while the coverage of other categories like hull, war etc varies from airline to airline. According to the operators, the reinsurance market in Nepal was dependent on the India for a long time since it started in the early 1960s. In recent times however, as both the risk and the premium witnessed a constant upsurge, the market shifted to Europe. Indian Insurance companies like GIC, ICICI Lombard, United India and IFFCO-TOKIO were the main reinsurance partners of insurance companies previously, but the number of Indian reinsurers who do reinsurance business in Nepal has decreased over the past few years. &nbsp;</p>
<p style="text-align: justify;">
	<strong>High Premium</strong></p>
<p style="text-align: justify;">
	After the 9/11 terrorist attack in the US in 2001, where two planes - American Airlines Flight 11 and United Airlines Flight 175 - were crashed into the North and South Trade Towers, the aviation sector saw a sudden rise in premiums globally. After the incident, most of the reinsurers increased their premium rates worldwide while others loaded the premium according to the risk factors. Nepali airliners are charged up to 12 per cent premium now while airliners generally pay 4-6 per cent internationally. Previously, the premium rate for Nepal was up to 7 per cent. Thapa says, “We used to pay USD 30,000 as &nbsp;premium as early as six years ago. Now we have to pay USD 300,000 for the same aircraft – 10 times more than the premium rates in the past.” Currently, Tara Air and Agni Air are paying up to 12 per cent premium. However, Panday says that the premium rates differ from airline to airline. He says, “It is not that all airlines have to pay a high premium. The premiums of some airliners are as low as 1.5 per cent.”&nbsp;</p>
<p style="text-align: justify;">
	There are many conditions when the reinsurers charge high premium. They charge more if they discover that the airliners have had an air accident in the last five years or have a high frequency of making claims. Prem Bahadur Maharjan, Chaiman of Rastriya Beema Sansthan (RBS), says, “The risk factor is not within our control and that needs to be reinsured with other international insurance companies outside the country.” Decrease in the number of airlines due to the crashes and age of the aircraft lead to also high premiums. Prof Dr Fatta Bahadur KC, Chairman of Beema Samiti, says, “We had had the normal rates. But when one reinsurer increases the premium rate, others follow suit. Now the weakest airliners have to pay dearly while others too are paying high charges.”&nbsp;</p>
<p style="text-align: justify;">
	As Nepali aviation insurance is serviced by the international reinsurance market, rising premium rates is affecting the sustainability of the business. As the risk increases the market becomes limited and the airliners have no choice but to accept the high premium rates. Kewal Krishna Shrestha, CEO of Everest Insurance says, “The aviation business is running though the reinsurers are charging up to 12 per cent. But what if they charge 20-25 per cent? I don’t think the aviation industry in Nepal could bear such high premiums.” He says the environment in future could be such that even the high premium might not draw the reinsurers into confidence because of the high risk involved in the Nepali aviation and that the reinsurers could add more clauses which could affect the overall aviation business in Nepal.&nbsp;</p>
<p style="text-align: justify;">
	The reinsurers, however, insist that the premium is always determined by the risks anywhere in the world. According to Dr Pronab Sen, CEO of Nepal operation of National Insurance Company, the government-owned insurance company of India, the premium is based on the past losses. He says, “If you see the statistics, almost every year there is a crash and sometimes, there are 2 crashes in Nepal. And the rate of premium is governed by the reinsurance market. Because of the air accidents, some of the reinsurers were hesitant to do business in Nepal.” Sen adds, “We have our own retention limit. Depending on our financial strength, we retain a very small portion of the risk and reinsure the rest with other reinsurance companies. This is a worldwide practice in the insurance business. It depends on portfolio and risks. Sometime we retain 20 to 80 per cent- sometimes 90- depending on the risks.” Doug Horne, Marketing and Business Development Manager at Airclaims- A UK-based leading reinsurance company, shares a similar experience. He says, “The present level of risk is too high but there are enough insurers willing to support the market, albeit currently at a higher cost than in some other places.”&nbsp;</p>
<div>
	<img alt="Aviation Insurance Business" height="298" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(3).jpg" width="550" /></div>
<div>
	<div>
		<strong>The Risky Rural</strong></div>
	<div>
		 </div>
	<div style="text-align: justify;">
		The airlines which fly mostly in the hilly region are among the high premium paying ones. On the trunk routes, the premium is only around 3-4 per cent and in the case of STOL (Short Take Off and Landing) runways, the premium rate varies from a minimum 3 to a maximum 12 per cent. Due to the risk in rural areas, the reinsurers load more premiums on them. According to the operators, the aviation insurance started becoming a loss-making business for reinsurers since 2009. There have been eight aviation crashes, killing 114 people in the past six years. Almost all these accidents took place in the hilly region. Of them, six deadly accidents occurred in 2011 and 2012 alone, excluding four helicopter crashes of which a couple were fatal. Being a mountainous country, the weather, terrain and the high altitude in the hilly region are the major challenges for the aviation sector. Poorly managed and small airfields, unpaved runways and lack of manpower to co-ordinate pilots in these areas are considered the reasons behind the air crashes. An aviation expert, requesting anonymity, says, “We need pilots who are well trained and have a sound understanding of weather pattern, especially clouds.”&nbsp;</div>
	<div style="text-align: justify;">
		The emergence of private airliners in domestic air transport started in 1992 when Nepal adopted a liberal aviation policy. And in 2002, expansion of the International Terminal Building at Tribhuwan International Airport (TIA) and the construction of a new Air Cargo Complex made it convenient for the international airliners to operate in Nepal. This increased the flow of international tourists in Nepal. Increased tourist arrivals, in turn, have led to a growth in the aviation business and aviation insurance business too. This is why the aviation insurance business has grown over &nbsp;the past decade. There are 10 fixed-wing airplane operators and five helicopter operators in Nepal at present. The Civil Aviation Report 2011-2012 also depicts a steady growth in the aviation sector with increasing flight movement.&nbsp;</div>
	<div style="text-align: justify;">
		There are altogether 54 airports in Nepal. Among them, 34 are operational at present. Among the running airports, eight are on the trunk routes- while the rest are in the remote areas. Thapa says, “Trunk route operators have fewer problems in comparison to the STOL route operators mainly because of the high hills and high altitude. There have been many instances of chopper accidents on the STOL routes.” Airports in Pokhara, Biratnagar, Janakpur, Nepalgunj, Bhairahawa, Kathamandu, Dhangadi and Chandragadhi are on the trunk route. The domestic aircraft which fly in trunk route have a minimum seat capacity of 15 and a maximum of 72 while the planes in STOL routes have minimum seat capacity of 9. &nbsp;Big aircraft fly on the trunk routes while the small ones &nbsp;are considered best for the hilly region. Suresh Acharya, Joint Secretary at Ministry of Tourism and Civil Aviation (MOTCA) says, “There is a high risk on the STOL route especially for twin-otters. There is an urgency to enhance the capacity of the pilots who fly on the STOL routes. ”</div>
</div>
<div>
	<div style="text-align: justify;">
		 </div>
	<div style="text-align: justify;">
		<strong>The aviation insurance cover</strong></div>
	<ul>
		<li style="text-align: justify;">
			Hull All Risk (Loss or Damage to the Aircraft)</li>
		<li style="text-align: justify;">
			Hull War</li>
		<li style="text-align: justify;">
			Passenger and Cargo Legal Liability</li>
		<li style="text-align: justify;">
			Crew Personal Accident</li>
		<li style="text-align: justify;">
			Pilots Loss of License</li>
		<li style="text-align: justify;">
			Third Party Liability</li>
	</ul>
	<div>
		<div style="text-align: justify;">
			<strong>Bad Image</strong></div>
		<div style="text-align: justify;">
			 </div>
		<div style="text-align: justify;">
			The frequency of accidents has created fear in the reinsurers’ minds, pushing Nepal into a ‘risk zone’. These accidents could have negative impact on the country’s tourism if the casualties included many foreigners. Nepali aviation sector had gone through similar hard times in the past too. Ten years ago when Maoist combatants set ablaze Fishtail Air’s helicopter in western Nepal, domestic airliners got notification from the reinsurance companies abroad that they won’t compensate the losses in case of any terrorist attack. &nbsp;Panday says, “Fear is a very dangerous thing. Our terrains are difficult, which has sent a wrong perception. Similarly, loss is also a perception and can be changed. All we need is 3 to 4 years of good loss ratio.”</div>
		<div style="text-align: justify;">
			The domestic airlines are often accused of poor maintenance of their airplanes and the pilots of not following the standard operation procedures. Similarly, it is said that there is often a lack of co-ordination between the&nbsp;captain and co-pilots. Acharya says, “According to our findings, human factor is responsible for 80- 85 per cent accidents. The remaining 15 per cent accidents are caused by failure of machine, bad weather etc. It seems that the pilots are not very efficient at taking the right decision in time of emergency or they do not make the maximum use of the cock-pit. Lack of co-ordination between pilots and co-pilots and no guidance from the ground people when the plane is flying is common.”</div>
	</div>
</div>
<div style="text-align: justify;">
	<img alt="Income and Expences" height="216" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(4).jpg" width="579" /></div>
<div style="text-align: justify;">
	 </div>
<div style="text-align: justify;">
	<div style="">
		Lack of consultation between the government and insurance authorities for resolving the key issues of the aviation sector has made the aviation business worse. Acharya says, “The government is unaware about the kind of image the reinsurance companies are making of Nepal. They should have believed the government’s aviation report.” He further adds, “We need to develop that kind of mechanism. We are ready to help whenever they need any support from the government. All we need to do is build that kind of mechanism where the government as well as the insurance companies could sort out the problems together.”&nbsp;</div>
	<div style="">
		The use of ‘old’ aircraft by some domestic airlines has only added to create a negative image of the Nepali aviation, though people in the industry and experts do not call it a problem. According to a Nepali scholar who has a Master’s degree in Aeronautical Engineering from Poland, not following the standard operation procedures by the aviation operators is the major drawback in Nepal’s aviation. He says, “It does not matter whether the plane is old or new; what matters is its scheduled as well as need-based maintenance.” Lack of distance measuring equipment (DME) at airports is another shortcoming for the country’s aviation sector. He adds, “Towers are more helpful in tracking the aircraft in the right way. However, most of our airports rely on windsocks &nbsp;to indicate wind direction and the relative wind speed. This is risky. Sometimes, there is no one in &nbsp;the towers at the airports to coordinate with the flying pilots.”&nbsp;</div>
	<div style="">
		An aircraft is generally considered safe until the deadline given by its manufacturer. There is a manual for every air plane and manual for flying hours including number of flights a day. The Beema Samiti issues, renews, dismisses the licenses of insurance companies, insurance surveyors and insurance agents. It has also been “working for the development, management and regulation of the insurance business in the country.” The BS 2067 Report of Beema Samiti has also recognized scarcity of skilled manpower, unhealthy competition among insurance companies and lack of reinsurance companies within the country as the major problems of the aviation insurance business. However, the Beema Samiti has not been able to address these problems properly. Maharjan says, “There has to be a strict monitoring mechanism for air traffic discipline and safety education to the people involved in the aviation business. Pilots should also be alerted against taking any sort of risks. Aviation safety is not related to money only; it’s about lives of people.”</div>
	<div>
		 </div>
</div>
<div style="padding:10px; background:#f4f3e6;">
	<strong>Utilizing Civil Aviation Academy&nbsp;</strong></div>
<div style="padding: 10px; background-color: rgb(244, 243, 230); text-align: justify; background-position: initial initial; background-repeat: initial initial;">
	If given due importance, the Civil Aviation Academy (CAA), the only training center for aviation related training in Nepal, could be beneficial to the whole aviation industry. CAA conducts basic, refresher, induction and recurrent trainings related to Air Traffic Control, Aviation Security, Fire fighting and rescue, CNS and others based on quality curriculum. Though it is the only state’s approved aviation training organization (ATO) in Nepal, the private sectors have failed to utilize them properly. Mahendra S. Rawal, Chief of CAA says, “Though we are also in the developing phase, we can still work together to develop expertise. Together we can either develop the infrastructure here or bring expertise from outside the country.” The CAA runs courses on Air Traffic Services (ATS), Engineering, Aviation Security, Aerodrome rescue and fire fighting among other five dozen courses ranging from knowledge based to competency based training.</div>
<p>
	 </p>
<p>
	<strong>The Way Forward</strong></p>
<p style="text-align: justify;">
	Mergers among insurance companies to increase capital base is regarded as one of the possibilities for enabling the insurance companies financially. The insurance companies are also trying to increase their retention capacity from 0.5 to 1 per cent which has spread positive message to their clients. There have been many progresses in Nepal’s aviation sector. From the month of Kartik, this year; Tourism Ministry has revised the provision of compulsory payment of 60 million dollar in third party liability to airliners during the registration time. CAAN has subsidized up to 8 million dollar to the airlines that fly to rural areas. An agreement was signed between the Government and CAAN for Capacity Enhancement Project of TIA under ADB loan in 2010. A safety audit was carried out in Nepal from 5 to 14 May 2009 according to the Universal Safety Oversight Audit Program (USOAP) as provisioned by ICAO and the Corrective Action Plan based on the flight safety. The findings of the audit have already been submitted to ICAO. Furthermore, a provision has been made to perform all activities in congruence with the concept of ICAO USOAP Audit Continuous Monitoring Approach (CMA).&nbsp;</p>
<p style="text-align: justify;">
	Tri Ratna Manandhar, Director General, CAAN says,” We have followed international standards in safety measures and the maintenance of aircraft is carried out as per the European standards- EASA Part-145. Buddha and Yeti airlines have already started it and others are in the process.” According to him an ICAO team is visiting Nepal in July 2013 for audit. He says, “After this ICAO audit, we will be able to prove that we have made progress in aviation management including the safety.” CAAN has been conducting strict safety programmes for safety and maintenance for the past six months. Likewise, the board of CAAN approved Air Operator’s Requirement (AOCR) in November 2012 which clearly mentions the requirements to get Air Operator Certificate. It has also managed the maintenance of aircrafts by AMT (Aircraft maintenance technician) from UK from this year. It is also planning to build an isolated parking for the planes having bomb threats and hijacking etc next year.&nbsp;</p>
<p style="text-align: justify;">
	No compromise &nbsp;at all with safety could be the best way to lower the high premium in Nepal’s aviation insurance, say the experts. The airline operators, too, are more aware about maintaining the safety standards today than in the past. AOAN has been organizing many seminars on aviation and programmes to help lower the premium by assuring safety. Thapa says, “There have been programmes organized aimed at enhancing the safety measures and we are very much confident that we would be able to enhance the safety measures.” He adds that airline operators are optimistic about reducing the risks. “A plane using only the Visual Flight Regulation (VFR) should not be allowed to go through the clouds. Pilots too should stop flying in pressure. If we follow all the safety measures definitely the risks have to go down. Civil Aviation Authority of Nepal (CAAN) should monitor these flights and instruct the airlines accordingly,” He says.&nbsp;</p>
<p style="text-align: justify;">
	Experts also feel the need of &nbsp;terrain awareness and warning systems (TAWS) developed by manufacturers and safety regulators to prevent accidents from Controlled Flight into Terrain (CFIT). CFIT is among the leading causes of airplane accidents involving the loss of life worldwide. The Wikipedia describes it as an accident in which an airworthy (fit to fly) aircraft, under pilot control, is unintentionally flown into the ground, a mountain, water, or an obstacle. With improvements in infrastructure, training and operations, reinsurers are also optimistic in reducing the cost of insurance to a reasonable level. Horne from Airclams says, “The prospects for aviation insurance business in Nepal are bright. There is a capable and knowledgeable local market which has good relationships with the global insurance community.” He adds, “What is perceived as the current high cost of insurance can and should be reduced for operators who demonstrate a good safety culture and record, adopt a Safety Management Programme that is working well and can prove that it is making a difference.”</p>
<p style="text-align: justify;">
	While the formation of a pool of all the insurance companies to collectively handle the claims in aviation insurance is in the initial phase, the government is planning to convert the insurance pool into a reinsurance company under Beema Samiti. &nbsp;Ramesh Lamsal, Executive Director of Insurance Pool says, “We have not prepared the business plan about aviation insurance yet. But if the aviation segment is included it will support the aviation business in Nepal.” Government authorities say that if the main players in the aviation business in Nepal- the airliners and insurance companies prepare appropriate strategy for the safety measures they are ready to co-operate insurance companies and protect them from those risks. Dr. KC says, “There should be positive attitude towards the formation of possible reinsurance company in Nepal after calculating the advantages and disadvantages on the business. The foremost thing is that it should be for the stability of the aviation business.”</p>',
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			'description' => 'The insurance companies providing aviation insurance have to pay a high amount of premium – more than 99 per cent at times - to the reinsurance companies abroad. In fact, the companies are sustaining their aviation insurance business from the commission they get for the premiums paid to the foreign reinsurers.',
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		'Article' => array(
			'id' => '873',
			'article_category_id' => '40',
			'title' => 'Nepali Insurance Companies Are Paying Big Premium To Re-insurance Companies',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘Nepali insurance companies are paying big premium to re-insurance companies’</strong></p>
<p>
	<img align="right" alt="Fatta Bahadur KC, Chairman Beema Samiti" height="329" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/fatta_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></p>
<address style="text-align: right;">
	<strong>Prof Dr Fatta Bahadur KC</strong></address>
<address style="text-align: right;">
	<strong>Chairman</strong></address>
<address style="text-align: right;">
	<strong>Beema Samiti (The Nepali regulator of Insurance Sector)</strong></address>
<p>
	 </p>
<p>
	 </p>
<p style="text-align: justify;">
	<strong>What is the size of the aviation insurance market in Nepal?</strong></p>
<p style="text-align: justify;">
	Aviation insurance is one of the important portfolios in the insurance sector. So far as the size of the aviation insurance is concerned, it has been increasing every year. There are altogether 17 non-life insurance companies registered. But only seven of them are into the aviation insurance business. The annual premium collection from aviation insurance in Nepal is about Rs 3 billion.&nbsp;</p>
<p style="text-align: justify;">
	<strong>It is said that some insurance companies are trying to form a pool to handle the aviation insurance claims collectively. What is the latest progress in this regard?</strong></p>
<p style="text-align: justify;">
	I, too, have heard that some insurance companies are trying to tie &nbsp;up to form such a pool. But this is yet to get a concrete shape, as far as I know. I think the main objective behind forming such a pool is to reduce insurance risks in the aviation sector. We hope the pool will come into operation in the near future.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What future do you see for the aviation insurance business in Nepal?</strong></p>
<p style="text-align: justify;">
	The future of aviation insurance business is bright. As the government has already adopted a liberal economic policy, many new airliners have entered Nepal. Aviation insurance as a business has grown in Nepal with the growth in the domestic aviation sector. &nbsp;Air travel has become convenient and affordable for many Nepalis today. This has ultimately helped the aviation insurance business grow in the country.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Almost whatever the insurance companies earn from the aviation segment goes to the reinsurance companies abroad. Some are even said to be making losses in the aviation segment. It is said that the companies know that they are not going to make profits from the aviation segment. But they do aviation insurance just to show high amount of premium collections. What do you say?</strong></p>
<p style="text-align: justify;">
	It is obvious. Though, insurance companies should have retention capacities to bear the risks by themselves, most of them lack this. This is one of the reasons why they transfer their risks to the re-insurance companies. Consequently, Nepali insurance companies have to pay a high volume of premium to them. The margin between the premium collected from the airlines companies and the premium paid to the re-insurers is very small. It shows that they are not able to save even the cost to transfer their risks. They need to transfer funds to reinsurance companies. It is a very serious problem.&nbsp;</p>
<p style="text-align: justify;">
	<strong>How can we lower the high insurance premium?</strong></p>
<p style="text-align: justify;">
	First of all, the airlines should try to be safe from different risks. Other stakeholders like CAAN should also maintain the runways properly and other technical aspects, information dissemination practices etc. The pilots, too, should be well-trained. All other stakeholders in the aviation sector should take this matter seriously, work on it together and make careful collective efforts to avoid risks.</p>
<p style="text-align: justify;">
	<strong>Aviation insurance premium in Nepal is said to be among the highest in the world? Why is it so high?</strong></p>
<p style="text-align: justify;">
	Yes it is true. Since the premium is always determined by risks; a high risk ultimately draws a higher premium. This risk is mainly associated with aircraft accidents; the more the accident, the more the risks. We have been trying to reduce the risks in this sector which is known as mitigation of the risks.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The annual claims payout in the aviation sector has been constantly rising. Some people say this could further increase the already significantly high aviation insurance premium. How are we going to address this problem?</strong></p>
<p style="text-align: justify;">
	It is a compulsion for the aviation insurance business in Nepal. Generally, if the premium is high, the practice of insurance is low but in aviation insurance, if the premium is high you need to reinsure with other big companies because of the risk factor. You need to find reliable reinsurers, pay premium and transfer your risks to them. There is a direct and positive relation between the increasing rate of premium and the business of aviation insurance. However, if all these measures are properly adopted then the premium rate will be low.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There are various types of aviation insurance policies in the world. Are all of them available in Nepal?</strong></p>
<p style="text-align: justify;">
	We have only few aviation policies which basically cover the aircraft, crew-members and passengers. It also covers the sky, and if both the parties agree, grounded risks are also included in the aviation insurance. Generally, an insurance policy depends on the requirement of the policy holder. Therefore, the requirements of the airliners play a key role in the agreement between the insurance companies and the airliners.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. How helpful was this summit?</strong></p>
<p style="text-align: justify;">
	The summit was a milestone in Nepal’s aviation sector. It’s &nbsp;definitely a positive development. It helped the stakeholders in the aviation business to know each other and, at the same time, provided a platform to share their experiences, views and problems. I think the re-insurers, the under-writers and other stakeholders who participated in the programme knew the actual situation of Nepal and the aviation insurance business here. The summit was successful and the Nepali stakeholders have succeeded in addressing some of the key issue of the aviation insurance business in Nepal.</p>',
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			'description' => 'The margin between the premium collected from the airlines companies and the premium paid to the re-insurers is very small. It shows that they are not able to save even the cost to transfer their risks.',
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	(int) 13 => array(
		'Article' => array(
			'id' => '872',
			'article_category_id' => '40',
			'title' => 'The Pooling Mechanism Is To Stabilize The Insurance Market',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘The pooling mechanism is to stabilize the insurance market’</strong></p>
<p>
	<strong><img align="right" alt="Mahendra Shrestha, Himalayan General Insurance" height="301" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/mahendra_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></strong></p>
<address style="text-align: right;">
	<strong>Mahendra Shrestha</strong></address>
<address style="text-align: right;">
	<strong>Managing Director</strong></address>
<address style="text-align: right;">
	<strong>Himalayan General Insurance</strong></address>
<p style="text-align: justify;">
	 </p>
<p style="text-align: justify;">
	<strong>What is your company’s stake in the aviation insurance market?</strong></p>
<p style="text-align: justify;">
	Himalayan General has been writing aviation insurance since 1998 and it is a portfolio we continue to be interested in.</p>
<p style="text-align: justify;">
	<strong>It is said that some insurance companies are trying to form a pool to collectively handle the aviation insurance claims. What is the latest progress in this regard?</strong></p>
<p style="text-align: justify;">
	Preliminary discussions have been initiated for the formation of aviation insurance pool. The formation of such a pool will not only allow insurance companies to gain capacity but also make it viable for the re-insurers to continue supporting Nepal’s aviation insurance market.</p>
<p style="text-align: justify;">
	<strong>What future do you see for the aviation insurance business in Nepal?</strong></p>
<p style="text-align: justify;">
	It is a portfolio which is an absolute necessity in Nepal and one that will continue to grow.</p>
<p style="text-align: justify;">
	<strong>Aviation insurance premium in Nepal is said to be one among the highest in the world? Why is it so high? How can we lower it?</strong></p>
<p style="text-align: justify;">
	Aviation insurance premium in Nepal is certainly very high. Some big losses in the last few years have pushed up the premium rates substantially. The continually rising premium rates are, of course, a serious concern because they impact the sustainability of the business. The pooling mechanism is one of the possibilities we are exploring in order to stabilize the market. Eventually, if the total premium paid is more than the total amount claimed in losses, we hope the premium will start to come down.</p>
<p style="text-align: justify;">
	What are the key challenges and issues facing the aviation insurance industry in Nepal and what needs to be done to address these challenges?</p>
<p style="text-align: justify;">
	Rising premium rates and shrinking market capacity are two major challenges the aviation insurance industry is currently facing. The Aviation Insurance Summit was one way to address these challenges and find a common direction for improvement and growth.</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. How helpful was this summit?</strong></p>
<p style="text-align: justify;">
	The Summit brought local stakeholders, including operators, regulatory bodies, insurance companies and banks as well as key players in the regional and global aviation insurance industry (including underwriters and re-insurance brokers) under one roof. It gave the Nepali stakeholders a global perspective on our current situation as well as access to the expertise of visiting delegates, all of whom have extensive experience in this sector, including in other countries with contexts similar to Nepal.</p>
<p style="text-align: justify;">
	All the delegates who attended the Summit said that they had found it to be a helpful introduction to the Nepal aviation insurance market, adding that it will help them take better decisions for supporting it.</p>',
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			'description' => 'The continually rising premium rate is a serious concern because they impact the sustainability of the business. The pooling mechanism is one of the possibilities we are exploring in order to stabilize the market.',
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			'article_category_id' => '40',
			'title' => 'We Are More Aware About  The Safety Concerns Today Than In The Past',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘We are more aware about the safety concerns today than in the past’</strong></p>
<p>
	<img align="right" alt="Rameshwor Thapa, Airlines Operators Association of Nepal " height="314" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/rameshwor_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></p>
<address style="text-align: right;">
	<br />
	<strong>Rameshwor Thapa</strong></address>
<address style="text-align: right;">
	<strong>President&nbsp;</strong></address>
<address style="text-align: right;">
	<strong>Airlines Operators Association of Nepal (AOAN)</strong></address>
<p>
	<strong><br />
	</strong></p>
<p style="text-align: justify;">
	<strong>What is the size of the aviation insurance market in Nepal?</strong></p>
<p style="text-align: justify;">
	When talking about the insurance size, the Nepali aviation insurance business is small in global comparison. However, it has an addressable size in the context of the South Asian countries. That means the aviation insurance market in Nepal is neither big nor small but of medium size in terms of money as well as the number of insurers involved in this business. We now pay USD 8 to 9 million in premium to international companies annually.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Why is the aviation insurance premium so high in Nepal? How can we lower it?</strong></p>
<p style="text-align: justify;">
	The re-occurrence of air crashes have contributed to the increment of aviation insurance premium. The open sky aviation policy has helped the mushrooming of airliners in Nepal while the infrastructure remains almost the same. And there may be many issues concerning safety issues. The dramatic increase in premium is also because of the climate and weather. Importantly, trunk route operators have fewer problems in comparison to the STOL (short takeoff and landing) route operators mainly because of the high hills and high altitude. In STOL, mainly in helicopters, there are many instances of accidents beyond what could be conconsidered as normal. &nbsp;</p>
<p style="text-align: justify;">
	Now there are more airports and other facilities which could be rated higher in safety. We are organizing many safety seminars and programmes to lower the premiums with the safety much assured. There have been programmes enhancing the safety measures and we are very much confident that we would be able to enhance safety measures. We are more aware about the safety concerns today than in the past. The audit reports by ICAO and other organizations have diversified it further and made it clear also. Aircraft and passenger safety should be the airliners’ main concern. If we maintain all this - for enhanced safety in the aviation sector - definitely the premium will come down.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There have been more than 50 major accidents in the past 10 years. Why is the frequency of aerial accidents so high in Nepal?&nbsp;</strong></p>
<p style="text-align: justify;">
	It is very sad and bitter fact. The increasing premium in aviation insurance is making it difficult for the airline companies. These days we are trying to improve the security in the aviation sector and are not expecting such accidents again. We are working to reduce such accidents by organizing different seminars and programmes to enhance safety in the aviation sector. Through these safety seminars, we are being able to make the stakeholders aware about air safety. There, we make the pilots aware about focusing on safety while the stakeholders update themselves with different issues and activities in the aviation sector. All the people involved in this sector should understand that not compromising any safety measures but maintaining them will help mitigate the risks. Visual Flight Regulation (VFR) should not be allowed to go through the clouds. &nbsp;If we follow all these safety measures, definitely the risks have to go down. Civil Aviation Authority of Nepal (CAAN) should monitor these flights and instruct accordingly.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The annual claims payout in the aviation insurance has been constantly rising. This is bound to further increase the already significantly high aviation insurance premium. How are we going to tackle this problem?</strong></p>
<p style="text-align: justify;">
	We are concerned about this problem. Basically, if we are able to enhance safety measures, it would help to lower the premium paid out to reinsurance companies. Most of the re-insurers are quite convinced that we would be able to maintain safety properly. End of the Maoist war has also spread positive message to the reinsurers. In the past, we had to pay US$ 60 million premium in third party liability though we owned small aircraft. After knowing the problem, Nepal government addressed this. And now we have to pay some 10 million dollars for the same. The thing is, once we fix the safety problem, the premium will come down.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There are various types of aviation insurance policies in the world. Are all of them available in Nepal?</strong></p>
<p style="text-align: justify;">
	There are not various types of insurance policies in the aviation insurance. The available insurances are air-craft’s insurance, passenger’s insurance, cargo insurance, crew-members insurance- including others. There are insurance policies with same periphery and nature and are normally practiced in other countries as well. Now there are different types of reinsurance market but the problem is they take our situation as an alarming one. I think the situation is not that alarming. Some of the reinsurance companies really want to work and support the Nepali aviation sector which includes Indian as well as western reinsurance companies. A new aviation group in Malaysia is also interested in this business. Moreover the re-insurer companies are not of various types; they are of a singular nature and type.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. What’s your impression of the summit?&nbsp;</strong></p>
<p style="text-align: justify;">
	It was definitely helpful to us. I think the reinsurance companies that were finding threats in our sky are convinced that the premium which we are paying is not justifiable. We hope that in the coming days they won’t increase the premiums and won’t take our sky as an alarming one for aviation insurance. They got a chance to understand our aviation environment and we had a chance to put the reality in front of them. We were able to prove that there is neither any violence in the country nor any threat in the aviation sector. We were able to prove that we are quite committed to maintaining safety and that we are continuously working on it. We have learnt from past accidents and we are committed to avoiding such accidents.&nbsp;</p>',
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			'title' => 'NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013 : Panacea For Growth, Saluting The Best',
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			'content' => '<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&ldquo;The political agenda dominated the national discourse and popular action in the last six decades of democratization of Nepal. Now is the time to evolve into the phase of economic agenda being on the top. The private sector of Nepal is the engine of growth, being efficient and cost-effective, and the government is to facilitate it through investment security, enabling laws like new Industrial Enterprise Act and Foreign Direct Investment Policy, et al.&rdquo;</div>
<div>
	&nbsp;</div>
<div>
	Thus spoke Shankar Koirala, Minister for Finance, Industries &amp; Commerce, Government of Nepal, inaugurating the maiden edition of the NewBiz Business Conclave &amp; Awards 2013, held in Hotel Soaltee Crowne Plaza on August 24.</div>
<div>
	&nbsp;</div>
<div>
	Nothing could have captured the mood, the spirit and the essence of this Conclave better than this statement. The Conclave was dedicated to finding a roadmap to doubling the economic growth from current 3.6% growth of the GDP to 7%, and beyond.</div>
<div>
	&nbsp;</div>
<div>
	In groups of three to five speakers, a large number of fore-ranking economists, thought-leaders, businessmen and invited guests from abroad focused on what may make the great Himalayan promise fulfilled and Nepal moving from the status of Least Developed Country to a Developing One within a decade by doubling its growth.</div>
<div>
	&nbsp;</div>
<div>
	&lsquo;Yes! We Can!&rsquo; was the spirit. &lsquo;Can Do&rsquo; was the motto. Even problems were noted as challenges to be tackled sooner or later. Indeed, for some time past now, in spite of several economic challenges, there has been a gradual amelioration of the situation too.</div>
<div>
	&nbsp;</div>
<div>
	Decades of political unrest, bitter ideological conflict, a shaky frame-work of democracy, despondency among some sections of the people, and challenges to entrepreneurship and of infra-structure have surely brought in an air of hopelessness among some youths. And, there is a large number of educated or skilled youths who are leaving the country for greener pastures around the world. It is not a wonder that Nepal receives as remittance equivalent to nearly a quarter of its GDP.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Not withstanding the challenges, every Nepali at heart dreams for turning the nation of exquisite beauty into the Switzerland of Asia. Every educated Nepali rightly wants to reap the best economic advantages of being land-locked between two large and fast developing neighbours, India and China. And, today, most adult citizens of this nation are waiting for ensuing elections to be held in time and peacefully, and political parties agreeing on a common economic agenda to take the country into a prosperous future.</div>
<div>
	&nbsp;</div>
<div>
	That was the spirit of the speakers in the Conclave (more details in later sections). Just a sampling of the views expressed in the Conclave:&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Last year service sector in Nepal grew by 6% and industry by 3% and hence it is not difficult to achieve 7% overall growth in a couple of years in Nepal. Industries here are running at half their capacity and just a better capacity utilization with a better labour situation and investments will double the growth.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Dr Yuba Raj Khatiwada</strong></div>
<div style="text-align: right;">
	<strong>Governor, Nepal Rastra Bank</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Vocational education is on the rise in Nepal, which is encouraging. The small and medium industries sectors are surviving by sheer hard work rather than an enabling business environment, and they must be encouraged.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Rameshore Khanal</strong></div>
<div style="text-align: right;">
	<strong>Former Finance Secretary</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;There are ample opportunities to promote specific districts with specific business focal points, like Dhading can be the organic district in order to access and expand the market of vegetables which covers the one-third of the Kathmandu market&hellip;.. Timely election being held, political class must rise to the occasion towards drawing a&nbsp;</span><span style="font-size: 14px;">Common Minimum Economic Agenda, towards which we from Nepal Inc are working.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>-Suraj Vaidya</strong></div>
<div style="text-align: right;">
	<strong>President, Federation of Nepalese Chambers of Commerce &amp; Industry</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;It&rsquo;s not just heritage and adventure, there are lot of scope in Nepal in terms of business and MICE tourism (Meeting, Incentive, Convention &amp; Exhibition).&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Amran Abdul Rahman</strong></div>
<div style="text-align: right;">
	<strong>Director, Malaysia Tourism</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Nepal can take a cue from Vibrant Gujarat Summit and its success in the economy of Gujarat, and can similarly bring in big ticket investments for hydro-power, infrastructure, manufacturing, tourism, agri-business and mines.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Sukanti Ghosh</strong></div>
<div style="text-align: right;">
	<strong>Managing Director (India), APCO Worldwide, USA</strong></div>
<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Nepal has more than half a century of planned economic development attempt. To achieve this target, we have to mechanise agriculture, commercial herbs, vegetables and fruits.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>-Binod Chaudhary</strong></div>
<div style="text-align: right;">
	<strong>President, Chaudhary Group</strong></div>
<div>
	&nbsp;</div>
<div>
	Where do we go from here? Future is pregnant with possibilities indeed.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Let&rsquo;s begin with the changing face of road network.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The Economic Survey of the Finance Ministry in 2013 says that more than 10,000 kms of roads are blacktopped, almost 6000 kms of road have been graveled, apart from nearly 8500 kms of earthen roads in Nepal. Except Humla and Dolpa, all other 73 districts have road access. The road connectivity with China has also added value to Nepal&rsquo;s economic sector. With the government trying to make the road investment strategy clear and long-term, there is enhanced interest of the private sector too in investing herein. The Public-Private-People Partnership driven Kathmandu-Kulekhani-Hetauda tunnel road is the signature evidence of this positivism.</div>
<div>
	&nbsp;</div>
<div>
	Coming to health and education, Nepal is on a positive direction to largely meet the Millennium Development Goals by 2015. Primary school enrolment has already crossed a whopping 95%, though at the secondary education level it is still one on three eligible children in education, in spite of some increase over the years. The latest infant mortality rate is at 9 per thousand live births, and maternal mortality rate has dropped to 229 per 100,000 live births, making the picture reasonably better than most South Asian neighbors. Significantly, nearly 4500 health institutions of various dimensions are providing health services to some 28 million people in this country. Nepal Living Standard Survey notes that one on four Nepalis today are below the poverty line, much better a situation than a decade or two ago.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Hydropower hopes have eluded the Himalayan nation for decades. Nepal&rsquo;s vast water resources are said to be next only to Brazil. However, till date Nepal is producing only 600 Megawatts of electricity whereas the known sources of hydropower can produce above 80,000 Megawatts, and it is still counting. This one sector alone can change the face of this nation. There are some clear signs towards progress. Upper Tamakoshi project with 456 Megawatts is progressing fast based on eco-friendly run-of-the-river model. Six other projects totaling around 240 Megawatts are also in progress. However, this sector needs clear and effective long-term policies, investment friendly environment and political stability.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The Agriculture sector has also taken a boost with 41 projec vts running on first priority and nine projects kept in second priority by the government, as listed by the National Planning Commission. These projects include special agriculture production program, co-operative farming, micro irrigation, livestock health service, agricultural research program, and others. The per hectare productivity today is around Rs.160,000, of the land available for agriculture and only 20 % is irrigated, and the average income of agriculture laborer has crossed Rs.70,000 per annum. Not the best of situations, but still no one dies of hunger in Nepal.</div>
<div>
	&nbsp;</div>
<div>
	In the manufacturing sector, the average growth rate per year over the last five years has been close to 2%. Production of food products, beverages, cigarettes, shoes, soaps, cement and plastic products have grown more than 3% per annum in this period. More than a thousand medium to large industries employing 300,000 of people function alongside more than a lac cottage and small industries with 600,000 people employed. Higher electricity and more and better roads can work miracles in this sector.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Finally, Tourism. It flourishes in tranquility. Civil war and political instability hitting tourism hard for some time in the past, Nepal is now witnessing positive signs with the total tourist arrivals in 2012 figuring 600,000 only by the air route! The average stay and spending per person per day are still low with less than 40 dollars a day spent by tourists. With 10 five star and 27 three and four star hotels, Nepal has a long way to go to tap the full potentials of tourism, which can be comparable to Malaysia or beyond.</div>
<div>
	&nbsp;</div>
<div>
	Yes, there is a long way to go for this beautiful nation of hardworking, patriotic and industrious people from the Mountains, Hills and the Terai-Madhesh, a nation where women have a better position in the society than many other South Asian nations in general in spite of poverty, a nation where youths work and study together in cities to earn economic independence, a nation where hugely diverse people live, work and enjoy each other&rsquo;s festivals together.</div>
<div>
	&nbsp;</div>
<div>
	The Nation awaits visionary statesman-like leadership ahead and the collective will of many to make a difference in the comity of nations.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The historic NewBiz Business Conclave and Awards is just the right step towards this direction: bringing to the fore the national economic priorities, trying to create a national consensus towards Common Minimum Economic Agenda, bringing forth the voices of business leaders and economists, and creating role models from among Nepal Inc in a nation where most political parties at least officially shun business and profits.</div>
<div>
	&nbsp;</div>
<div>
	Rightly did the NewBiz Chairman Madan Lamsal say at the onset of the awards ceremony, &ldquo;It is said that our work is our love made visible. This is indeed our labour of love. It is a historic moment to come to this point where New Business Age and Aarthik Abhiyan, the nation&rsquo;s leading business publications, salute the best performers in business who have been doing well in spite of economic challenges and political instability. And I congratulate each of the ten winners whom you will know in some moments from now one by one, in advance. We honor ourselves by honoring you. You have not done anything for awards, but for growth and development, to generate profits, employment, and welfare of a lot of people. You are our role models. A nation, yearning to grow, to be counted in the comity of nations, salute each of you for your extra ordinary achievement which will inspire the youth to dream and strive for more.&rdquo;</div>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p1%20(Copy)(1).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 283px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						Minister for Finance, Industries, Commerce and Supplies, Government of Nepal, Shankar Koirala along with Newbiz Chairman Madan Lamsal and other distinguished guests launched a book titled &mdash; Nepalko Arthik Briddhi Ek Margachitra (Sambriddha Nepal Abhiyan) during the Conclave &amp; Award ceremony at Soaltee Crowne Plaza.</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p2%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 443px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: center;">
						Invitees at registration desk of Newbiz Conclave &amp; Awards-2013</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p3%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 365px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						<div>
							Binod Chaudhary, President Chaudhary Group exchanging words with Professor Dinesh Chapagain and former finance minister Madhukar SJB Rana at Newbiz Conclave &amp; Awards-2013.</div>
					</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p4%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 285px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						Minister for Finance, Industries, Commerce and Supplies, Shankar Koirala along with Dr. Yuba Raj Khatiwada, Governor of Nepal Rastra Bank, Newbiz Chairman Madan Lamsal and moderator of the Conclave Achyut Wagle during the interactive session of the Conclave.</div>
				</div>
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	&nbsp;</p>',
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			'content' => '<div>
	&nbsp;</div>
<div>
	What are the elements that shape the country&rsquo;s transition from volatile politics to stable democracy? All too often, policy analysts focus on the political process, while neglecting the vital role of economic reform in determining democratic success or failure.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In the last decade, high unemployment and lack of entrepreneurial opportunities posed serious challenges to Nepal&rsquo;s transition. On the other hand, the country faced growing unresolved grievances caused by issues such as misappropriation of private property, rampant corruption and widening inequality.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Yet, there is silver lining. Despite a decade-long political turmoil and armed conflict, the country&rsquo;s economy was successful enough to maintain its basic economic indicators in a positive direction. It is for sure that the country will go through a long and complex journey before the current political transition will settle to form a stable democracy. The question remains as to how to unleash economic prosperity in the current situation.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Many believe that the country can achieve prosperity if elections are held on time as political parties will agree on a common economic agenda to take the country into a prosperous future.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The government on July 14 announced the annual budget of Rs 517.24 billion for the Fiscal Year 2013-14 through an ordinance. This is the first time in two years that a government budget has been announced for the entire fiscal year before the fiscal year begins. The budget of the current fiscal year gives special emphasis on elections to the Constituent Assembly by earmarking Rs 16 billion to hold the CA election. The budget has also emphasised on sustainable development along with economic growth and stability.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The government is heading towards a dream of achieving the status of a &lsquo;developing country&rsquo; by 2022 through a three-year plan. Many suspect whether the Nepali economy can begin the journey of prosperity in the given circumstances. The experience of the last decade, however, shows that the country can achieve things if the CA election is held on time and if political parties are united on a common economic agenda.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Despite political instability, Nepal has witnessed a noticeable growth in all sectors during the last decade. In recent years, many banks and money transfer businesses have grown. Nepal was one of the highest receivers of remittance on the basis of the Gross Domestic Product (GDP) in 2011.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Between 1980-2012, Nepal&rsquo;s Human Development Index (HDI) rose by 3.8 percent annually from 0.234 to 0.463 today, which ranks the country 157 out of 187 countries with comparable data.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Nepal is one of the 189 countries committed to the Millennium Development Goals (MDGs), a pledge renewed in its three year plan (2010-2013). The data from MDG progress report for Nepal 2010 prepared in partnership between the government of Nepal and the UN country team indicates that Nepal may be able to achieve most of its MDG targets by 2015.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	There are noticeable improvements in other economic indicators too. The national poverty line has gone down to 25 percent, net enrollment rate has increased to 93.7 percent, under five mortality has reduced to 50 per 1000 live births and maternal mortality has reduced to 229 per 100,000 live births which is almost reduction by half in 10 years&rsquo; time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Be it the health and education sector or the manufacturing and industrial sector, the country has succeeded to achieve remarkable progress despite political instability during the last decade.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Improvements in health services have resulted in a decline in the mortality rate. The declining mortality rate coupled with high fertility rate has resulted in rapid population growth. Control of malaria and other epidemics and the expansion of medical and public health facilities also reduce morbidity and mortality in the country. School enrollments of both boys and girls at all levels have increased.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	There are rays of hope also in the hydropower sector too. Currently a power deficit country will be a power surplus one by 2018 if all ongoing projects will be completed within a stipulated time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Around a dozen of hydropower projects including 556 MW Upper Tamakoshi, 50 MW Upper Marsyngdi, 60 MW Trishuli 3A and 42 MW Upper Modi along with others are under construction. These projects are supposed to end existing massive power outage problem and lead the country into the era of industrialisation.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	During the conflict era, the tourism sector suffered a lot resulting in the closure of some renowned five-star hotels. The conflict also tarnished the image of the country in the global scene. However, the entire tourism sector has started to revive now and it is certainly no surprise that hotels have mushroomed in recent years. As the number of tourists and foreign business travelers in Nepal are growing in step with its economy, Nepal&rsquo;s rapidly maturing hotel industry is one of the key beneficiaries. The tourism sector has given much to the Nepali business community to cheer.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The total contribution of the travel and tourism sector to the GDP stood at RS. 119.1 billion in 2011, according to the World Travel and Tourism Council and was forecasted to rise by 4.8 percent in 2012 and by 4.1 percent per annum to NRP 185.5 by 2022.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Some of the road construction projects that are under the works raise hope in the realm of infrastructure development. Tripura Sundari to Satbanjha (25 km), Satbhanja to Gokuleshwar (54 km), Khodpe to Kalinga Bridge, Chainpur (62 km) are some major projects to connect rural Nepal by road access.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	These projects would lead to a 6 percent increase in the number of people with all-season road access and a 35 percent decrease in travel time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Educating and uplifting the status of the vulnerable and marginalised children, women empowerment through community-based livelihood enhancement projects is a tool to leap forward. Programmes of integrated rural development and nature conservation in the mountain region of Chitwan district is worth mentioning for steady rural reconstruction in Nepal.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Not only the telecom sector but also the entire Information and Communication Technology (ICT) sector has been witnessing a remarkable growth after the political revolution in 1990. Both growth and expansion of the ICT sector has lured many brands and companies to invest in the country. The monopoly of the state-owned Nepal Telecom has ended and many players have emerged in the telecom and ICT business.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Today, all districts of the country have telecom facilities and consumers are using state-of-art technology and sophisticated devices to prove themselves tech-savvy. The government and private sectors are mulling to utilise ICT to boost the economy by using its maximum potential to promote all sectors.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In recent years, the agricultural sector has also gained attention from the government as well as the private sector. The government&rsquo;s plan to modernise agriculture, ease the distribution of chemical fertilizers, step up the construction of irrigation projects would at least decrease the country&rsquo;s dependency on import for the agro-products, making the country self-reliant.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Green Kathmandu, Clean Bagmati campaign will lift the face of the river flowing through the capital. The Melamchi Drinking Water Project will solve the problem of acute shortage of water in the Kathmandu valley.&nbsp;</div>
<div>
	It is always said that the youth are not just leaders of tomorrow but partners of today.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The population of youth between the age of 15 and 29 is 6.131 million in Nepal. This accounts for 26.5 percent of the total population. Consolidating youth for prosperous development should be the main responsibility of the state, private sectors, and civil society.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The nation should take advantage of young talent and energy, simultaneously solving problems of violence, instability and abusive behaviour. Considering these facts, it is necessary to invest energy and capacity embodied in the youngsters in a constructive way for the development of our country by making the rural youth competent and responsible.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Since we are going through a post conflict period, the state machinery should not neglect this mass. The government should come up with a plan to engage these large numbers of youth in creative and entrepreneurial ventures. This is the need of hour of our country. Also, it is the only way to enhance our youth with their energy and efforts.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In a country like Nepal, real development Let us dream together that one day the rural youth of Nepal will be able to lead not only the development process but also play a vital role in the economic, cultural and political sectors.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	As in an essay by noted litterateur Laxmi Prasad Devkota entitled &lsquo;Is Nepal Insignificant?&rsquo; where he eloquently writes about the prospects of Nepal, this country has tremendous potential for economic growth. But all we need to boost the country&rsquo;s economy are commitment from the political leadership, positive thinking of the general public and sincere and genuine efforts from the private sector.</div>
<div>
	&nbsp;</div>',
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			'created' => '2013-08-23',
			'modified' => '0000-00-00',
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			'description' => 'In an ideal situation, we have hopes of becoming Switzerland. In reality, our conversation begins with negative news. It seems Nepalis are very enthusiastic to change the country but put in little effort for their own part',
			'sortorder' => '1545',
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			'id' => '1446',
			'article_category_id' => '40',
			'title' => 'Towards Inclusive Growth',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size: 12px;">It was India&rsquo;s Montek Ahluwalia who coined the phrase &lsquo;inclusive growth&rdquo; in the 1970s with the World Bank (WB) Report &ldquo;Redistribution with Growth&rdquo;; and later it was reckoned that $ 1 per day (currently $ 1.25 per day) as being the line of absolute poverty which had to be traversed to be pro-poor and &lsquo;inclusive&rsquo;.&nbsp;</span></div>
<div>
	&nbsp;</div>
<div>
	Whereas Marx wanted &ldquo;forced redistribution&rdquo; of assets of the feudal and bourgeois classes for inclusion, Ahluwalia wanted redistribution through legal, monetary and fiscal interventions. The problem with both was that, as socialists, the concept lacked faith in the middle class as the true vanguards of democracy-- and the private sector as the true engineers of efficient and rapid economic growth and employment creation.</div>
<div>
	&nbsp;</div>
<div>
	And so this $ 1 a day &lsquo;absolute poverty&rsquo; thesis of Montek Ahluwalia gave birth to the Human Development thesis of Pakistan&rsquo;s Mahbul Haq, which basically sought &lsquo;inclusion&rsquo; by creating equality of opportunities for all those excluded, especially women and the girl child.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Haq pioneered the human capital revolution which got us to think of creativity and productivity as the true source of prosperity and human welfare and not the usual underscoring of the importance of natural, physical or financial capital. He got us to think of people as more than just labour. And he made them the centerpiece of development.</div>
<div>
	<img alt="" src="/userfiles/images/cs1.jpg" style="float: left; margin: 0px 10px 0px 0px; width: 220px; height: 328px;" /></div>
<div>
	The Human Development Index is his lasting legacy. Haq learnt from the experience of Pakistan in the 1960s that one could have 7% GDP growth and also suffer acute inequalities and inequities to exclude the poor from the fruits of growth&mdash;and worse, exclude 50% of the population of women who needed to be empowered by the State. He also re-introduced the concept of &lsquo;human security&rsquo; which was the foundation on which the Japanese economic miracle of the 1950s-70s occurred with little or no natural resources.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&lsquo;Growth&rsquo; and &lsquo;development&rsquo; are related but different concepts. Growth theories apply to developed nations whereas development theories apply to underdeveloped nations mired in hunger, malnutrition, illiteracy, ill health, superstition, deprivation, exploitation and underemployment of human resources.</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth also refers to the need for a &lsquo;balanced growth&rsquo; between (a) agriculture and manufacturing and (b) urban and rural areas of a nation. Thus inter &ndash;industry analysis and input-output models were developed and regional economics became a separate discipline to deal with geographic inequalities in growth. (As early as the 1970s Centre for Economic Development and Administration (CEDA) under Tribhuvan University, intellectually led by the likes of Dr Harka B Gurung and Dr Ratna SJB Rana were doing such seminal work for Nepal for regional balance by examining possible growth centres and corridors, which was waylaid by foreign aid that opted for extraneous models of development. This eventually sowed the seeds of conflict in Nepal with its over-emphasis on the role of the central bureaucracy and a Kathmandu-centric model of development. I am referring to the failed Integrated Development Projects (IRDPs) of the World Bank and the several bilateral donors working in isolation of each other to practically make the central bureaucracy their own dysfunctional and corrupt fiefdoms. It failed because it was costly and opted for decentralization rather than devolution with bottom up local leadership development with people&rsquo;s participation).</div>
<div>
	&nbsp;</div>
<div>
	In the 1980s, a new growth and development paradigm was born-- &lsquo;sustainable growth&rsquo;. It was felt that the cost to the natural environment was not being factored in by the GDP approach as the very success of growth resulted in externalities such as environment degradation, pollution of air, soil, water&mdash;one may say, development&rsquo;s impact was toxic. For most of the time, growth theory was driven by concern for its pace and pattern of growth. Then comes concern for its impact on Nature. And thus was added a new dimension to &lsquo;inclusion&rsquo; theory.&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs2.jpg" style="float: right; margin: 0px 0px 0px 10px; width: 352px; height: 175px;" /></div>
<div>
	In the 1990&rsquo;s, led by Nepal&rsquo;s Gandhian statesman PM Krishna Prasad Bhattarai, a new concept was bestowed to the development paradigm. &lsquo;Pro-poor growth&rsquo; was the term coined by the SAARC Independent Commissioners in 1992 (see the SAARC Secretariat Report: &ldquo;Meeing the Challenge) as it began to grapple with growth models that tended to &lsquo;walk on one foot&rsquo;, as it were. Thus it emphasized Structural and Extended Structural Adjustment Programmes (SAP and ESAP) passionately underwritten by the International Monetary Fund (IMF) and the World Bank in tandem to usher economic and financial reforms since the 1980s.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The SAP and E-SAP model of growth and development ignored the contribution that the poor, especially women, could make to growth by treating them as objects of development and not the subjects. Hence the call for &lsquo;pro-poor growth&rsquo; with Organizations of the Poor to be engaged in self help, self development and self management by designing locally based growth and development models unique to its social, cultural and ecological environments. For this to happen, it called for Social Mobilization of the Poor by the State so that they can participate in development and democracy through the mechanism of the Market. It believed that South Asia could have 9% GDP growth with 3% being contributed by the poor themselves, if it followed a strategy of walking on two legs &ndash; (a) priority to agriculture (b) development of labour intensive SMEs in manufacturing (c) human development and human security (d) social mobilization of the poor to create Organizations of the Poor to pursue their own models of growth and at their own pace as also to countervail the power of the ruling and rural elites. Its lasting contribution is the inclusion of &lsquo;social capital&rsquo; as a viable and relevant development model where the local culture should be included, and seen as an enduring asset, along with the traditional local institutions in the form of Community-based Organisations (CBOs) and TVOs. (Alas, the NGOs, sadly, were trying to make them irrelevant being driven by extraneous social and political forces under the banner of universal human rights )&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs3.jpg" style="width: 525px; height: 175px; margin: 10px 25px;" /></div>
<div>
	&nbsp;</div>
<div>
	<strong>Development through Devolution (The Alternative Model for 2015-20)&nbsp;</strong></div>
<div>
	&nbsp;</div>
<div>
	It is unlikely that a top-down driven development paradigm comprising national planning, state enterprises, labour unions &hellip; will allow inclusion of all. This can only happen when opportunities are created for all by supporting markets garnished by agrarian, economic, financial, administrative and labour reforms. Not least maximizing a bottom up development paradigm with maximum scope for local leadership development and culture-specific innovations to achieve MDGs goals and targets by the locals themselves in tune with their own capacity to deliver. This requires that the national think tanks adopt more than Chamber&rsquo;s Participatory Research Approach (PRA) for Participatory Action Research (PAR) as underlined by the SAARC Independent Commission on Poverty Alleviation of 1992.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth must mean growth with productive employment by creating opportunities for jobs and by investing in one&rsquo;s human capital development of own self and family members for the jobs --in the context of globalization The primary focus of inclusive growth must be on quality of human capital and so needs inclusion of Private Sector as the engine of growth since they create jobs for employees and opportunities for the self-employed.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Planning must be macro, meso and micro, all harmonized strategically. The Macro Plan must project the desired structure of the economy for the next 25 years and the five year plan must be a human resource development plan that addresses the human capital requirements for the perspective economy of the future (say 2035) based on manpower supply and demand projections and plans judiciously integrated with the educational plan that opens avenues for vocational, apprenticeship, technical and technological for the variety of occupations in the national economy and in the global labour markets.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In other words, the State will have 5 Five Year Rolling Macro Plans that will be supplemented by Meso Plans to strategically manage education, health, gender, children, youth, old age, disabled, castes and creeds, urbanization, water, energy, ICT, transportation, investment, saving, capital markets, credit flows, exports, imports, taxation, and also corporate governance, entrepreneurship development, R &amp;D; S&amp;T, and monopoly regulation, for example, depending on the number of Ministries to be created. The fewer the Ministries the better. Let us emphasize that these ministries must move towards being a &lsquo;managerial civil service&rsquo; (as happened in East Asia to turn their economies into Tigers) and not continue to function as the colonial &lsquo;administrative civil service&rsquo; mired in red tape and acutely devoid of horizontal communication and coordination.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Competition is the name of the game and with it goes merit &ndash;not reservations. Hence private sector must seek to gather the &lsquo;fortune at the bottom of the pyramid&rsquo; as part of their core business strategies. And SMEs and Micro Enterprises and Social Entrepreneurs are vital actors in the formulation and execution of the national and sector plans, as well as the creation of urban clusters and supply chains.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive growth requires that we take in a host of factors and forces like geography, demography, social factors and forces, governance etc and hence has to be participative to require decisions at all levels and all actors &ndash;not just the state guided by the NPC with its very weak basic and applied research capacities coupled with rapid turnover of planners with the political changes. Such NPCs are a waste of national resources and should be converted to an Advisory Economic Council with the Prime Minister Office (PMO), if they are genuinely needed. What is now needed is Integrated Sector Programming and National Performance Budgets governed by a Fiscal Management and Responsibility Act as exists, for example, in South Korea and India.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth is growth that benefits each and every segment of a society with no exclusions whatever. This means when women&rsquo;s work at home they be paid for and their contribution to the GDP be duly recognized and rewarded.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Nepal&rsquo;s development plan has to be framed in the perspective of the opportunities from India, China and Bangladesh in due cognizance of our economic structure and development constraints. It requires our policy planners and private sector to be proactively engaged in national and sector dialogues with each other: to set down targets and outcomes for coordinated policy and designing of sector and multi sector programmes aligned with the annual performance budgets. We have to assess feasible economic growth targets for each 5 yr periods first and foremost in consensus with the political parties&mdash;and not be driven by external agents and fanciful notions of the political leadership who are very, very weak in their understanding of economics and finance.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	We have to set achievable GDP and sector targets and act accordingly to secure them jointly with the local governments, NGOs and private sector Each target must be supported by country-wide action plan and programme. For example (a) eradication of illiteracy (b) raising GDP by 5.5% (c) agri growth at 4.0% (d) inflation down to 7.5% (e) industrial growth by 10% -- devolved to districts with their own targets set locally (f) lower capital output ratio through more efficient planning, choice of foreign aid and eradication of graft and corruption; ICT for better governance (g) gender budget for gender inclusion to name a few development agenda topics.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Immense macro economic benefits have accrued from remittances which is now 25% of GDP. It has helped reduce poverty from 42% (1996) to 24% (2012). It has prevented Nepal from economic collapse and stabilized economic growth at the midterm growth rate of around 3.5- 4% between 2005-13.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Yes, costs have been borne at the household and individual levels with the pain and suffering of international migration and debts incurred for it. However, one can take advantage from the challenges by planning the remittance economy better so as to empower women head of household and the girl child with the skills to fill in the job vacancies as happened during WWI ad WW II that liberated women once in for all in the West.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs4.jpg" style="width: 525px; height: 175px;" /></div>
<div>
	&nbsp;</div>
<div>
	<strong>Conclusions&nbsp;</strong></div>
<div>
	&nbsp;</div>
<div>
	South Asian concept of Inclusiveness is this: all growth and development models must be ingrained in our civilizational heritage&mdash;not that of the Greeks, Romans or Christians or Marx and Mao. Inclusiveness should be based on one&rsquo;s culture adapted for internally to achieve modernity and based on pragmatism for the greatest public good. It seeks to be grounded not on a Capitalist or Socialist Society with all its ideological baggage but on a Humane Society where Planet Earth is a Global Village embodied and enriched by pluralistic cultures and cosmopolitan individuals with multiple identities with equal value, as was bestowed upon us by the eternal wisdom of Swami Vivekanada.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth and Development are super structure means to an end that needs to be holistically entrenched with sound social, economic, ecological and political structures that are themselves inclusive. Let us summarize the parameters and their variables here below:&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(A) Inclusive Society: formalization of CBOs, organization of the poor, social mobilization, preservation and promotion of multiple identity; maximum role for the social organizations; protects and promotes the joint family system rather than the state acting as nanny and nurse and creates a Commonwealth of Plural Societies with various civil society organizations &ndash;and their national federations-- to represent professional, business, religious, gender and cultural interests;&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(B) Inclusive Economy: access to credit for all; entrepreneurship development; traditional skill development; community ownership of resources; markets that respect consumer and ecological sovereignties;&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(C) Inclusive Environment: harmonious nature-people relationships in the context of global warming and climate change , and</div>
<div>
	&nbsp;</div>
<div>
	(D) Inclusive Polity: direct democracy; inclusive institutions &ndash;education, health, access to justice; rule of law; community leadership; empowerment of gram panchayats; modernity through local leadership and local culture ; proportional representation of communities and gender in all political parties for inclusive governance and political leadership and political space to duly elected civil society federations to be represented rotationally in the Upper House of Parliament so that short run political interests are countervailed by long-run non political civil society interests.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Finally, given all the above parameters and their variables for inclusion there is really no need for an ethnic-based Inclusive State to render justice to all and the next generations. Yes, we need an Inclusive Constitution to not exclude any. Primarily, to ensure the supremacy of the Constitution and the rule of law by having independent institutions to check the abuse of power by the political authority and guarantee accountability, transparency, competition and merit in the body politic for the larger public good.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	I submit, we do not even need a federal state. Much wiser to devolve responsibility to the 4440 VDC and 75 Districts and Municipalities for dynamic and harmonious Inclusive Growth and Development of an independent and sovereign Nepal with its territorial integrity intact.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<em><span style="font-size:11px;">(Rana is Professor South Asian Institute of Management (SAIM) and Former Finance Minister.)</span></em></div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs5.jpg" style="width: 525px; height: 175px; margin: 5px 25px;" /></div>
<div>
	&nbsp;</div>',
			'published' => true,
			'created' => '2013-07-19',
			'modified' => '2013-07-21',
			'keywords' => 'new business age cover story news & articles, cover story news & articles from new business age nepal, cover story headlines from nepal,  current and latest cover story news from nepal, economic news from nepal, nepali cover story economic news and events,  ongoing  cover story news of nepal',
			'description' => 'It is a la mode, these days, to speak of ‘inclusive growth’ and ‘inclusive development’. In Nepal’s case, the Maoists have extended it to ‘inclusive State’: and with it the constitutional and political contours of new Nepal are yet unclear—and remain extremely contentions.',
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	(int) 3 => array(
		'Article' => array(
			'id' => '1077',
			'article_category_id' => '40',
			'title' => 'Nepali Banking In Transition Through Mergers And IPOs',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p>
	<strong>By Siromani Dhungana (with inputs from Yagya Banjade and Rashesh Vaidya)</strong></p>
<p>
	<em>As per the NRB’s latest data, the country has 31 commercial banks, 87 development banks, 80 financial companies and 21 micro-finance companies. The number shows that there is tough competition among banks and financial institutions (BFIs) forcing them to face multiple challenges. The major one is surely the capital base. The introduction of merger policy has created opportunities for banks to increase their capital base. At the same time, the BFIs are also going ahead with Initial Public Offerings (IPOs) to increase their capital base. In this issue, New Business Age tries to present an overview of how the Nepali banking sector is going about with mergers and IPOs.</em></p>
<p>
	The trend of announcing merger plans by the banks and financial institutions (BFIs) has gathered pace in recent months. According to Nepal Rastra Bank, a total of 28 banks and financial institutions (BFIs) have already merged with each other reducing the total number of BFIs by 15. Similarly, some 24 BFIs have already received Letter of Intent (LoI) to be merged with one other, and upon completion of this process, the total number of BFIs will reduce by another 14. And, other 12 BFIs have applied for the LoI. Once these too complete the process, the number of BFIs will be reduced by additional 5.</p>
<p>
	This shows that in spite of several weaknesses to implement monetary policy, Nepal Rastra Bank (NRB) has become quite successful in implementing its merger policy. Earlier, the central bank had announced packages of rebates, discounts, waivers and facilities to the BFIs opting for mergers. But now, the bankers themselves believe that merger has become compulsory for many banks which are suffering from the problem of low capital base and limited geographical coverage.</p>
<p>
	Similarly, a wave of Initial Public Offerings (IPOs) has started among the new BFIs. In the last Nepali calendar year that ended on mid-April, 20 BFIs issued IPOs, issuing shares worth Rs 5.6 billion. More offering such IPOs are in the pipeline. Though BFIs can increase their capital base also through Further Public Offering (FPO) of their shares, very few of them have opted for this route.</p>
<p>
	<strong>Need for Merger</strong></p>
<p>
	Apparently, the universal objectives of the merger or acquisition are to consolidate the capital, reduce operational expenses, expand business and maximise profits.&nbsp;</p>
<p>
	However, in our case, mergers of three distinct natures now seem to be in the offing.&nbsp;</p>
<p>
	Firstly, relatively large institutions are planning to create a larger capital base so they could compete with global players who could potentially begin their operations here owing to WTO arrangements.&nbsp;</p>
<p>
	The second type of merger would be compulsive of sorts as the NRB has asked the BFIs belonging to the same business house to integrate without any “ifs and buts’’.&nbsp;</p>
<p>
	The third types are those who fear the complete meltdown if they fail to merge soon to consolidate resources, introduce corporate best practices and reduce expenses.&nbsp;</p>
<p>
	Consolidation is becoming increasingly necessary as banks are struggling to give returns to their shareholders. Almost all BFIs are eyeing mergers, and the number of BFIs will come down notably in the next three years.</p>
<p>
	However, bankers say more incentives are needed to speed up mergers, particularly between commercial banks. For example, they have been demanding decrease in corporate income tax to 20 percent from the current 30 percent for a merged BFI.</p>
<p>
	As there is no environment for increasing capital by issuing rights shares and bonus shares as that will not be enough to raise capital to the required level, finance companies have no other&nbsp;option than to go for a merger. Many finance companies have thought that’s it’s better to opt for a merger than to face action from the central bank for failing to increase the capital to the required level next year.</p>
<p>
	Also the shaken public confidence on towards banking institutions due to recent problems in the banking sector and their inability to give proper returns to their shareholders, has forced the BFIs to increasingly lean towards consolidation.&nbsp;</p>
<p>
	Consolidation is necessary also to increase the paid-up capital since the possibility to increase of paid up capital by issuing rights shares is very slim. Moreover, the size of loans being demanded by single borrowers has been increasing in recent years. So, BFIs having low paid-up capital cannot fulfill such demand.&nbsp;</p>
<p>
	Similarly, merger becomes an urgent need also because due to the terms agreed by Nepal while gaining membership of World Trade Organisation (WTO), financail services sector is open for foreign investors beginning 2010. So, foreign banks can open their branch in nepal. If big foreign banks open their branches in Nepal, the Nepali banks with small capital base may not be competitive.</p>
<p>
	<strong style="font-size: 12px;"><span style="font-size: 12px;"><br />
	</span></strong></p>
<p>
	<strong style="font-size: 12px;"><span style="font-size: 12px;">The Journey of BFIs Mergers in Nepal So Far</span></strong></p>
<p>
	The journey of merger of Nepali banks began nine years back. In 2004, Laxmi Bank merged into it Himalayan Saving and Finance Company (HISEF), and it was done according to the broad provisions of Company Act and Bank and Financial Institution Act (BAFIA). The then Narayani Finance and National Finance had merged to become Narayani National Finance following the same Acts. Similarly, Himchuli Development Bank and Birgunj Finance merged and became H &amp; B Development Bank aalso merged under the same act.</p>
<p>
	That experience highlighted a need for special rules to govern this process. But was only in May 2011 that Nepal Rastra Bank came up with a special rule to facilitate mergers between BFIs.</p>
<p>
	When Nepal Rastra Bank (NRB) introduced the Merger By-laws in May 2011, many had still doubted whether Nepali banks and financial institutions (BFIs) would go for mergers as the concept was a relatively new for the country. &nbsp;That doubt seemed valid for some time. But soon a merger spree started among BFIs. Birgunj Finance and Himchuli Bikas Bank sought LoI from NRB in 2004 and completed their merger the same year becoming H&amp;B Development Bank. The process gained memorandum after that. (See box for the list of BFIs merged so far.)</p>
<p>
	<img alt="Nepal Rastra Bank" height="345" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_nrb.jpg" style="margin: 0 10px 0 0;" width="595" /></p>
<p>
	As the list on the box shows, most of the BFIs that have chosen to merge are development banks and finance companies merging with another institution of same category or with a commercial bank. However, latelycommercial banks too have started merging with another commercial bank. The recent such example is the merger process started by Bank of Asia Nepal and Nepal Industrial and Commercial Bank Limited.</p>
<p>
	<strong>Major Provisions of Merger By-Law</strong></p>
<ol>
	<li>
		<strong>‘A’, ‘B’ and ‘C’ class financial institutions can merge into each other. ‘D’ class FI can merge with another ‘D’ class FI only.<br />
		</strong></li>
	<li>
		<strong>FIs that want to merge should form a separate merger committee and sign Memorandum of Understanding (MoU).<br />
		</strong></li>
	<li>
		<strong>The due process including MoU should be completed before applying to the Nepal Rastra Bank (NRB)for Letter of Intent (LoI). NRB should hold a meeting within 15 days of receiving LoI application.<br />
		</strong></li>
	<li>
		<strong>NRB decides whether to issue LoI or not after conducting discussions and detailed study of concerned institutions.<br />
		</strong></li>
	<li>
		<strong>Due Diligence Audit should complete within six months of receiving LoI from the central bank.<br />
		</strong></li>
	<li>
		<strong>The detailed factual report comprising assets and liabilities of concerned institutions should be submitted to the NRB.<br />
		</strong></li>
	<li>
		<strong>Copy of the decision regarding name, address and share ratio of concerned financial institutions should be submitted to NRB.<br />
		</strong></li>
	<li>
		<strong>Action plan of concerned financial institution including date of operation after merger process is completed should be submitted to NRB.<br />
		</strong></li>
	<li>
		<strong><span style="font-size: 12px;">Other documents as prescribed by the NRB should be submitted to NRB.</span><br />
		</strong></li>
</ol>
<p>
	<strong><span style="font-size: 12px;">NRB can ask for merger if the following situation prevails:</span></strong></p>
<ol>
	<li>
		<strong>In case representatives of a family, business group, firm or company are found assuming posts in the boards of directors of two or more BFIs and/or their financial conditions remain unhealthy.</strong></li>
	<li>
		<strong>If the non-performing loans (NPL) exceeded 5 percent of the total loan portfolio for 3 consecutive years.&nbsp;</strong></li>
	<li>
		<strong>Increase in systematic risk (i.e. in a situation when a BFI seems likely to fail to meet liabilities).</strong></li>
	<li>
		<strong>If independent operation of a BFI is causing negative impact on the banking system.</strong></li>
	<li>
		<strong>If a BFI faces prompt corrective action (PCA) for three times or more.</strong></li>
	<li>
		<strong>If NRB finds that merger of systemically important BFIs will strengthen the entire banking system.</strong></li>
</ol>
<p>
	<strong>Facilities for Merger</strong></p>
<p>
	The new regulations have pledged relaxation on provisions for capital structure, shareholding limit for promoters, credit-deposit ratio, borrowings limit for promoters and deprived sector lending, among others.</p>
<p>
	If the merger causes increase in the shareholding percentage of any promoter beyond the stipulated limit, such promoters get five years time to bring down their stake within the limit.</p>
<p>
	Likewise, merged institutions are allowed additional three years to bring CD ratio down to the of 80 percent. Similarly, promoters get additional three years to bring their borrowing (loans) down to less than 50 percent of the total shares they hold in the merged BFI.</p>
<p>
	In a bid to lure BFIs to merger, the central bank has even promised a discount in refinance rate by one percentage point to the merged institution. It has also offered to lower penal rate on standing liquidity facility by half for three years in case two or more BFIs merged into one.</p>
<p>
	The central bank has also opened upgrading of &nbsp;fianancial institutions relaxed the restriction on upgrading of a BFI to encourage merger. A BFI can upgrade to higher category (category ‘C’ to ‘B’ and from ‘B’ to ‘A’) if the institution seeking to upgrade is formed through a merger).</p>
<p>
	The rules also promise to recommend to the government for exemption of taxes in case a BFI faces losses during the course of merger facilities include the time duration of using SLF will be expanded to 30 days from the existing 5 days for three years after completion of merger process. NRB can provide other facilities according to the need of the banks.&nbsp;</p>
<p>
	<strong>Challenges of Transition</strong></p>
<p>
	Most of the consumers do not get sense of transition of banks merger because in an ideal case, all banking services continue to function normally even during the transition. ATM cards work, checks consumers write do not bounce and consumers will be able to get the all services.&nbsp;</p>
<p>
	&nbsp;However, banks face several problems during the transition. Among others major challenges of merger are as mentioned below:</p>
<p>
	<strong>1. Brand Name</strong></p>
<p>
	The identity of the institution in the market is through the brand name. The image of an entity is joining with a brand image. So, the settlement in the brand name of the newly formed merged entity is essential.</p>
<p>
	<strong>2. Composition of board of directors (BoD) and shareholders</strong></p>
<p>
	The major decision makers in any entity are the board of directors and the shareholders. If the disputes arise among these people, the performance as well as the future of the entity will be directly hampered. So, the number as well as the persons that should represent at the BoD should be settled in cool mind.</p>
<p>
	<strong>3. Structure of the new management team</strong></p>
<p>
	The new merged entity comprises of the management team from two or more different entities. So, clear visions should be set-up for making the new management team which could handle the merged organization in coming days.</p>
<p>
	<strong>4. Employees Management</strong></p>
<p>
	As the organization is merged, at the same time the employees also come together. The major assets any organization is human resources. So, if the merged entity can not handle properly the grievances of the employees, the situation of disputes may arise. &nbsp;</p>
<p>
	<strong>5. Ownership Division</strong></p>
<p>
	The problem of division among the ownership might arise in the merged entity. The questions of shareholding as well as takeover of the share equity might create division among the shareholders. &nbsp;</p>
<p>
	<strong>6. Banking Software</strong></p>
<p>
	Various types of software are being used by the BFIs for the smooth operation. Huge cost and efforts had been gone in maintain the software in an organization. But if the two different entities are using two different types of banking software, the problem as well as cost may arise in the settlement of the books of accounts.</p>
<p>
	 </p>
<p>
	<strong>Need of Separate Acquisition Law</strong></p>
<p>
	Acquisition is, however, yet to come under the legal regime in the country. The central bank has said that it has been doing necessary preparations to introduce a separate legal mechanism on acquisition to encourage consolidation of the financial sector. Acquisition of financial institutions is difficult at present since there is no related legal provision, says CEO of Kailash Bikas Bank Krishna Raj Lamichhane who is also the president of Development Bankers Association.</p>
<p>
	NRB officials say that about half a dozen banks had held talks with the central bank about the possibility of acquiring regional development banks and finance companies to reach out to new areas. Acquisition is a relatively faster process as the challenges of merger such as it can be done once the buyer and the seller reach an agreement. Bankers say the introduction of legal provisions for acquisition will help bring down the number of BFIs in the country. The central bank needs to be careful while issuing new licenses and also the ability for smaller banks to withstand the economic crisis.</p>
<p>
	<strong>IPO Attraction</strong></p>
<p>
	The Nepali investors have been showing very encouraging response to the IPO of the company, especially of commercial banks. The data of Securities Board of Nepal (Sebon) reveals that 22 companies have got approval for the IPO from mid July 2012 to till the mid May of 2013. Shares worth of Rs 5.78 billion came in the market during this period. Of the total 22 companies, eight development banks, eight commercial banks, three finance companies, one insurance company and one hydro-power company.</p>
<p>
	<strong>The Direction Ahead</strong></p>
<p>
	The foremost challenge to the country’s banking sector in the realm of merger of banks is to create an environment where major financial institutions will go for merger voluntarily, says Upendra Paudyal, vice-president of Nepal Bankers Association (NBA).</p>
<p>
	The overall financial health of merged institutions has been found to be improved so far, he opines, saying the primary intention of the merger should be to strengthen capacity of concerned banks and financial institutions.&nbsp;</p>
<p>
	The policy taken by the Nepal Rastra Bank has resulted in positive signs since the market players in the arena of banks and financial institutions have saturated, adds Paudyal says. “Merger bylaws have played very crucial role in lowering the number of BFIs.”&nbsp;</p>
<p>
	But there is a question about the way forward of merger in the banking sector. The mathematical aspect has been highlighted so far by both the government and the BFIs, Paudyal says. It is cultural aspect which largely determines the success of merger. Sincere effort from all concerned parties is a must to make a merger journey a great success in the counry, he concludes.</p>
<p>
	&nbsp;&nbsp;</p>
<hr />
<p>
	<strong>In Nutshell</strong></p>
<p>
	The first case of merger between BFIs in Nepal was the merger of HISEF Finance Ltd into Laxmi Bank Ltd in 2004</p>
<p>
	<strong>BFIs that have merged already</strong></p>
<ul>
	<li>
		Himchuli Development Bank &amp; Birgunj Finance forming H&amp;B Development Bank Ltd</li>
	<li>
		Narayani Finance &amp; National Finance forming Narayani National Finance</li>
	<li>
		Nepal Bangladesh Bank &amp; Nepal-Sri Lanka Merchant Bank forming Nepal Bangladesh Bank Ltd</li>
	<li>
		Kasthamandap Development Bank &amp; Shikhar Finance forming Kasthamandap Development Bank Ltd</li>
	<li>
		Business Development Bank &amp; Universal Finance forming Business Universal Development Bank Ltd</li>
	<li>
		Machhapuchchhre Bank &amp; Standard Finance forming Machhapuchchhre Bank Ltd</li>
	<li>
		Global Bank &amp; IME Financial Institution &amp; Lord Buddha Finance forming Global IME Bank Ltd</li>
	<li>
		Infrastructure Development Bank &amp; Swastik Merchant Finance forming Infrastructure Development Bank Ltd</li>
	<li>
		Annapurna Development Bank &amp; Suryadarshan Finance forming Supreme Development Bank Ltd</li>
	<li>
		Vibor Bikas Bank &amp; Bhajuratna Finance forming Vibor Bikas Bank Ltd</li>
	<li>
		Alpic Everest Finance &amp; Butwal Finance &amp; CMB Finance forming Synergy Finance Co Ltd</li>
	<li>
		Shine Development Bank &amp; Resunga Development Bank forming Shine Resunga Development Bank</li>
	<li>
		Pashupati Development Bank &amp; Udyam Development Bank forming Axis Development Bank Ltd</li>
	<li>
		Prudential Finance &amp; Gorkha Finance forming Prudential Finance Company Ltd</li>
	<li>
		NIC Bank &amp; Bank of Asia forming NIC Asia Bank Ltd (Process ongoing)</li>
</ul>
<p>
	<strong>Letter of Intent (LoI) Received &nbsp; &nbsp;&nbsp;</strong></p>
<ul>
	<li>
		Premier Finance &amp; Imperial Finance to form Premier Imperial Finance</li>
	<li>
		Royal Merchant Banking and Finance, Rara Bikas Bank &amp; Api Finance</li>
	<li>
		Araniko Development Bank &amp; Surya Development Bank</li>
	<li>
		Central Finance Ltd &amp; Patan Finance Ltd</li>
	<li>
		Diyalo Bikas Bank Ltd &amp; Professional Bikas Bank Ltd</li>
	<li>
		NDEP Development Bank &amp; Hama Finance Ltd</li>
	<li>
		Siddhatha Development Bank &amp; Public Development Bank Ltd</li>
	<li>
		Five Regional Development Bank to form One National Level Gramin Bikas Bank</li>
	<li>
		Shangrila Development Bank Ltd &amp; Bagheshwor Development Bank</li>
</ul>
<p>
	<strong>LoI In Pipeline&nbsp;</strong></p>
<ul>
	<li>
		Lalitpur Finance Ltd &nbsp;&amp; Progressive Finance Ltd</li>
	<li>
		Sagarmatha Merchant and Finance Ltd &nbsp;&amp; Reliance Finance Ltd</li>
	<li>
		Social Development Bank &amp; Corporate Development Bank</li>
	<li>
		Vibor Bikas Bank &amp; Kist Bank Ltd</li>
	<li>
		Manakamana Development Bank Ltd, Infrastructure Development Bank, Yeti Finance Limited &amp; Valley Finance Ltd.&nbsp;</li>
	<li>
		Khadbari Bikas Bank &amp; Birat Laxmi Finance</li>
	<li>
		Global IME Bank &amp; Social Development Bank Ltd.</li>
</ul>
<p>
	<strong>Merger Process Dumped</strong></p>
<ul>
	<li>
		Kathmandu Finance Ltd &amp; Civil Merchant Bittiya Sanstha Ltd</li>
</ul>
<div>
	<hr />
</div>
<p>
	<strong><span style="font-size: 12px;">Financial Indicators of the Merged Entities</span></strong></p>
<div>
	<p>
		The major financial indicators of the merged entities have slightly improved compared to the pre-merger situation.&nbsp;</p>
	<p>
		Machhapuchhre Bank Ltd (MBL) had a higher level of non-performing loan (NPL) before merger than of the Standard Finance Limited (SFL). The NPL of MBL was at 2.84 percent whereas; the NPL of SFL was at 0.73 percent. After the merger, the NPL of MBL stood at 2.73 percent according to the financial report for mid-July 2012.</p>
	<p>
		The Credit Deposit (CD) Ratio of SFL was very high at 104.27 percent whereas, the ratio was at good level at 74.62 percent for MBL before merger. &nbsp;After the merger the CD ratio of MBL was maintained at 73.07 &nbsp; percent. But the Return on Assets (ROA) declined below one percent.</p>
	<p>
		&nbsp;Among the three merged entities in Global IME Bank Ltd, the financial performance of Lord Buddha Finance Ltd was not good. Its Capital Adequacy Ratio (CAR) was very high at 33.76 percent. &nbsp;Similarly, the NPL and ROA of the finance company were at 3.99 percent and -0.61 percent respectively. The NPL of merged entity, Global IME Bank Ltd stands at 1.54 percent as of the third quarter report of the FY 2012-13. At the same time the ROA is at 1.13 percent.</p>
	<p>
		Similarly, in Vibor Bikas Bank after merger of Bhajuratna Finance &amp; Saving Co. Ltd. has a high level of CAR at 14.42 percent but at the same time the level of NPL has increased to 32.63 percent till the third quarter of the F/Y 2012-13. The ROA of the bank is also seen negative. It is at -1.95 percent.&nbsp;</p>
	<p>
		Vibor Bikas Bank is again going ahead with a proposal of merger with Kist Bank Ltd. &nbsp;The NPL of the Kist Bank Ltd is seen comparatively lower than of the Vibor Bikas Bank. The ratio was at 32.63 percent and 7.89 percent for Vibor Bikas Bank and Kist Bank respectively as of third quarter of the F/Y 2012-13. &nbsp;Both the banks have posted the negative ROA during the third quarter of the FY 2012-13. Similarly, Vibor Bikas Bank has not been able to maintain the good level of CD ratio during the period.</p>
	<p>
		Recently, Bank of Asia Nepal Ltd and NIC Bank Ltd have received LoI from NRB for merger. The banks have already announced a plan to publish their combined financial report of the fourth quarter of F/Y 2012-13 in the name of the merged entity, NIC Asia Bank Ltd. Both the banks’ indicators show that they are in a financially sound position. After the merger they are likely to emerge even stronger in the banking market.</p>
	<p>
		<img alt="Financial Indicators of Some Merged and to be Merged BFIs:" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_financial_indicators.jpg" style="margin:0 10px 0 0;" /></p>
</div>
<div>
	<hr />
	<p>
		<strong style="font-size: 12px;"><span style="font-size: 12px;"><br />
		</span></strong></p>
	<p>
		<strong style="font-size: 12px;"><span style="font-size: 12px;">‘Merger is a need of the entire financial system’</span></strong></p>
	<p>
		 </p>
	<p>
		<strong><img alt="Bhaskar Mani Gyawali, Spokesperson, NRB" height="240" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_bhaskar.jpg" style="float:left; margin:0 10px 0 0;" width="200" />What &nbsp;is the situation of merger in the banking and financial Institutions (BFIs)?</strong></p>
	<p>
		The trend of merger in BFIs has grown lately. &nbsp;After the introduction of Merger Bylaws in 2011 by Nepal Rastra Bank (NRB), 22 financial institutions merged to become 10 within a year. This is very encouraging.</p>
	<p>
		<strong>Why is there a need for merger in the financial market?&nbsp;</strong></p>
	<p>
		Financial institutions have mushroomed in the country, thanks to the liberal policies adopted by Nepal Rastra Bank in the past. Given the size of our financial system, the number of BFIs looks more than normal. Many of these institutions had invested in the real estate sector without any long-term benefits. NRB was forced to fix a ceiling on real estate investment by banks after a surge in the volume of nonperforming loans.</p>
	<p>
		Investment by financial institutions in unproductive sectors caused a liquidity crisis in the market. These institutions also failed to maintain corporate governance. &nbsp;Financial institutions should be able to return money to depositors as required. NRB had introduced Merger Bylaws 2011 to improve the condition of financial institutions.</p>
	<p>
		<strong>Why are there no expected improvements in merged institutions?</strong></p>
	<p>
		Merged organizations are much improved in comparison to single and troublesome financial institutions. The process of merger has helped institutions increase their capital base and ability to return the people’s money.&nbsp;</p>
	<p>
		<strong>Can you briefly tell us the merger process?</strong></p>
	<p>
		Merger is a need of the entire financial system of Nepal. The share swap ratio is obviously an issue of tension in the pre-merger phase. NRB provides counseling services to all institutions which want to go for merger. The process is very simple. At first, the BFIs should take the special decision of merger thorough the General Meeting of shareholders. Then they should sign a Memorandum of Understanding (MoU) for merger. Then, after forming a merger committee, they should apply to the central bank for the Letter of Intent. NRB conducts interaction with concerned stakeholders and provides insights including strengths and weaknesses of the merging BFIs. If BFIs want to continue the merger process even after the interaction, NRB approves the LoI. Concerned financial institutions should approve new structure which will come into effect after the completion of the merger process.</p>
	<p>
		&nbsp;NRB should always deal the entire merger process carefully because merger should not promote monopolistic business.</p>
	<p>
		<strong>What are the post-merger complications? Does NRB intervene if complications arise in the post-merger phase?</strong></p>
	<p>
		Some minor complications are inevitable in the post-merger phase. Salary disputes, implementation of new structure and other managerial work create several complications. NRB provides the necessary assistance if the situation so demands. Similarly, the central bank may opt for positive intervention if the post-merger complications start to hurt the entire transactions of the concerned BFI.</p>
	<p>
		<strong>Are the BFIs reluctant for mergers?</strong></p>
	<p>
		Definitely not. But merger is a complex process. Two or more institutions can opt for a merger when they develop a sense of mutual trust. Many chiefs have to agree to make one chief. Jumbo administrative committees have to be downsized. The present scenario of mergers is pretty exciting.</p>
	<p>
		<strong>Is merger a less attractive proposition because of the low incentives for the same?&nbsp;</strong></p>
	<p>
		First, organizations should be aware about the merger process. They should be aware that merger is not for NRB but for them. This is because it is their responsibility to make the organization stronger and sustainable. Providing different incentives and schemes to organizations is like luring a child by giving them chocolates. It is unnecessary to entice them like that.&nbsp;</p>
	<p>
		<strong>The incentives provided to the merging institutions have been discontinued. What about reintroducing these insentives to the institutions that will merge now ?</strong></p>
	<p>
		NRB couldn’t continue the facility because of the incomplete budget. &nbsp;As soon as we have a full budget, NRB will renstate these facilities. The central bank is committed to facilitate the merger process.&nbsp;</p>
	<p>
		<strong>Where has NRB’s preparation regarding bylaws related to acquisition reached?</strong></p>
	<p>
		Legally, BFIs &nbsp;which want to acquire the stake of any &nbsp;other financial institution can do so. The only difficulty is that NRB does not have any specific guideline and legal provision to tackle the issue of acquisition. NRB, however, is very supportive if any financial institution wants to acquire the stakes of other institution.</p>
	<p>
		<strong>Is NRB considering forced mergers?</strong></p>
	<p>
		 </p>
	<p>
		NRB is not for forced mergers because there is a need for mutual bonding in order to operate the merged entity smoothly. But NRB might force institutions which are in miserable financial status and cannot improve the same over a period of time.</p>
</div>
<div>
	<hr />
</div>
<p>
	<strong>Initial Public Offering in Banking Sector</strong></p>
<p>
	<strong><br />
	</strong></p>
<p>
	<img alt="Niraj Giri" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_niraj.jpg" style="float:left; margin:0 10px 0 0;" width="200" />The capital market is a mechanism created to facilitate the exchange of financial assets with a maturity period of more than a year. It is a broad term embracing the buyers and sellers of securities and all the agencies that assist the sale and resale of securities.&nbsp;</p>
<p>
	Capital market activities started in Nepal in 1937 with the issuance of the shares of Biratnagar Jute Mills Ltd. However, a more structured market activity started with the establishment of a stock trading mechanism in 1976 along with the establishment of the Securities Exchange Center. Enactment of the Securities Act and establishment of the Securities Board in 1983 gave the impetus for the development of capital market in Nepal in a more organized manner. In the early 90s after the success of the first People’s Movement, the government adopted liberal economic policies and opened up various areas to the private sector. This paved the way for the entry of private banks into the country’s financial market.&nbsp;</p>
<p>
	With the opening up of the economy, banks and financial institutions (BFIs) from the private sector have been in the forefront of making initial public offerings (IPOs). The IPOs of BFIs are also the most sought-after IPOs in the secondary market. In fact, most of the trading that takes place in the secondary market is that of the shares of companies from the banking and financial sector. So, this sector has played a major role in the development of our capital market., the number of companies listed at Nepal Stock Exchange (NEPSE) as of May 17, 2013 was 224 of which 29 are commercial banks and 142 development banks and finance companies. Besides, 68 per cent of the daily trade at NEPSE is of the shares of commercial banks. This shows that the secondary market in Nepal is highly dominated by the banking sector. Why is this sector so dominant?</p>
<p>
	There are various reasons. First and foremost is the licensing requirement of Nepal Rastra Bank (NRB), the central bank. NRB has made it mandatory for BFIs to issue their shares to the public. BFIs have to go for IPOs within two years of obtaining the operating license from the central bank. Besides, in IPOs, funds flow from the provider to the user. This means the contribution of IPOs to financing companies is direct in the sense that it provides them with additional funds for either starting a new business or expanding or diversifying the existing ones. This might not sound true for banking sector companies. However, IPOs fetch them funds which they can use to lend or to meet the various other requirements such as capital requirement set forth by the regulator. IPO also gives the public investors a partial ownership of the company and an opportunity to be represented at its board of directors. This representation of public directors in the board helps to bring about transparency and good governance at the higher echelon of the company.</p>
<p>
	When Janata Bank Ltd &nbsp;issued an IPO worth Rs 600 million last year, it was believed that the bank had ill-timed the issuance as the secondary market indicator, the NEPSE index, was bearish. &nbsp;Investors were pulling out of &nbsp;the secondary market and the merchant bankers related with the IPOs, too, were worried about the subscription. However, when the IPO closed, the issuance had been oversubscribed by 2.43 times. This showed that the investors still had confidence in the IPOs of commercial banks. The IPO of Janata Bank was followed by that of Civil Bank Ltd which &nbsp;issued an IPO worth Rs 800 million which, in turn, was oversubscribed by 6.38 times. Recently, Commertz &amp; Trust Bank Ltd made an IPO worth Rs 600 million which was oversubscribed by 11.64 times. During the same period, IPOs of some development banks and finance companies were undersubscribed or even cancelled.&nbsp;</p>
<p>
	NRB has put a lot of emphasis on good corporate governance practices in the banking sector and banks are under constant supervision of the central bank. Barring a few, most banks have been giving good returns, in terms of cash dividend and bonus shares to their investors. The investors, too, have benefitted from a higher capital gain from the trading of shares of banks, compared to those of companies from other sectors. There is also a belief amongst the investors that commercial banks do not fail. This has boosted the investors’ confidence in banking stocks.&nbsp;</p>
<p>
	Both the government and the central bank have been persuading the BFIs for mergers in order to strengthen the banks and consolidate the growth of the financial sector. Some financial institutions have opted for merger and the effects of this will be seen on the market in the coming days. Though difficult, mergers will definitely strengthen the banks' capital base and enhance their operational efficiency through synergic effects. This, in turn, will attract more investors to banking stocks.&nbsp;</p>
<p>
	<span style="font-size:10px;">(The author is a Director at SEBON)</span></p>
<div>
	<hr />
</div>
<p>
	<strong>Problems of Merger</strong></p>
<p>
	<strong><br />
	</strong></p>
<p>
	<img alt="Krishna Raj Lamichhane" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_krishna.jpg" style="float:left; margin:0 10px 0 0;" width="200" />The country’s banks and financial sector witnessed a significant change with the introduction of merger bylaw by Nepal Rastra Bank (NRB), the central regulatory body of banks and financial institutions (BFIs). The bylaw has provided unique opportunities to BFIs to overcome the problem of capital inadequacy.</p>
<p>
	Nepal Rastra bank enacted merger bylaw in 2011 and the pace of merger have accelerated after that. The reasons of mergers among banks and financial institution is obvious, they want expand their presence in the market. Some major reasons of merger are as mentioned below:</p>
<p>
	<strong>Increase capital base:</strong> The reason of most of the mergers is that banks want to increase their capital base. The central bank has urged banks to enhance capital base to expand their services into the urban areas especially in the capital.</p>
<p>
	<strong>Expand services: </strong>Banking consolidation helps concerned institutions expand their services. For instance, merger provides opportunities of utilizing each other’s brand and public relation jointly. Banks and financial institutions can expand their services after increasing their capital base. Similarly, merger helps banks to increase investment capacity that will make them capable of investing in huge projects.</p>
<p>
	<strong>Implementing new and innovative ideas: </strong>Banking consolidation through merger will allow BFIs to explore chances of coming up with innovative ideas. Together, the banks and financial institutions can enhance their operation system and implement effective management.</p>
<p>
	However, the process of merging of banks and financial institutions is not free of hassles. There are basically two types of hassles to complete the merger process: i) external or created by the regulator and ii) internal or the managerial problems within banks and financial institutions.</p>
<p>
	At present, the central bank has made it mandatory to stop trade of shares after starting the merger process which, I think, should be changed. I do not see any logic and rationale behind this provision.&nbsp;</p>
<p>
	Similarly, the government does not provide any facility to the banks and financial institutions which want to be merged. I feel that the government should reduce corporate tax to 25 per cent from existing 30 per cent for five years after merger process complete. It is necessary because BFIs should invest huge chunks of money in managerial activities to complete the merger process. It is really challenging to ensure smooth transition and resolution of conflict likely to surface among the staff due to hostility, ego clashes or layoffs during the merger process.</p>
<p>
	It is a fact that the existing merger process between various financial institutions seem to be more forceful in nature. I do not mean that the Nepal Rastra Bank has put any pressure for mergers but the circumstances have made BFIs merge. I think the government should create an environment where banks and financial institutions voluntarily show their readiness to be merged.</p>
<p>
	<span style="font-size:10px;">(Writer is Chairman of Development Bankers Association and CEO at Kailash Bikash Bank)</span></p>
<div>
	<hr />
</div>
<div>
	<div>
		<strong>Merger and Its Challenges</strong></div>
</div>
<div>
	<strong><br />
	</strong></div>
<p>
	<img alt="Guru Prasad Paudel" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_guru_prasad.jpg" style="float:left; margin:0 10px 0 0;" width="200" />Business organizations can combine with each other in a various ways. One of the most common approaches is Mergers and Acquisition (M&amp;A), which combine independent firms under common control. After unveiling a merger bylaw, the practices of M&amp;A in Nepali banking sector has been increasing tremendously. Around two dozen BFIs merged each other and created 13 institutions. More than two dozen BFIs have got the letter of intent (LOI) to go for the merger. Even if merger has been practiced in the financial sector to cope the various issues, there has been no real academic effort to extensively appraise how employees are reacting, adapting and coping with the new realities in the post– merger period as well as how BFIs are achieving their business targets.&nbsp;</p>
<p>
	Furthermore, we should not forget that in achieving the objective of BFIs merger, quite a number of intrinsic risk factors may be involved both during and post merger period which should have to be address by regulators as well as by bank BOD and senior management level.&nbsp;</p>
<p>
	Literature says, merger that has been practiced internationally is not less challenging. Some inherent features of merger as well as some country specific problems add more challenges in it. In the past, tangible aspects (e.g. capital, raw materials, equipment etc.) were the major issues of merger. Now the scenario has changed, and intangible aspects (e.g., human capital, culture, knowledge, goodwill, brand etc) are emerging as key challenges. &nbsp;</p>
<p>
	We adopted merger strategy very lately; though it has more than 120 years long history internationally. Nepal dose not have separate Act about M&amp;A, so there may arise some legal risk in the future. Today, large BFIs desire to acquire small financial institutions but we have no Acquisition provisions. M&amp;A is significantly affected by the geo-political condition of the country. Present situation of our country is unfavurable for mergers because of the rise in concept of divergence and dissolution, which is a serious external threat for merger. Lack of specific Act and provisions regarding acquisitions and geo-political scenario are major challenges. Besides these, some challenges and problems are as follows:&nbsp;</p>
<ul>
	<li>
		Top executives and top level management team may leave unexpectedly. When they leave the merged organization the expected synergy will be evaporated.</li>
	<li>
		Expected synergies evaporate also because of cultural differences. Research says only 23 percent of all M&amp;A earn their cost of capital.</li>
	<li>
		Data migration plays vital role in the merger, sometimes this single task will be multi-time expensive than other factors of merger.&nbsp;</li>
	<li>
		Expenses get increased because of disposal of old stationeries, write-off provisions of duplicated branches.&nbsp;</li>
	<li>
		Power politics can be a major obstacle to the success of M&amp;A.</li>
	<li>
		Agency problem is another key challenge of M&amp;A.</li>
	<li>
		Who are going to leave from the BOD &nbsp;will be an anxious issue.&nbsp;</li>
	<li>
		It further creates anxiety while selecting CEO or top level management officials because the institutions undergoing merger have their own individual CEO or higher management authorities.&nbsp;</li>
	<li>
		Due Diligence Audit Report (DDAR) does not give accurate price of the institutions hidden contingent liabilities may get added which further enhance the challenge in the merger.&nbsp;</li>
	<li>
		Management of employee of duplicated branches is yet another high value expense occurred due to merger.</li>
</ul>
<p>
	<span style="font-size:10px;">(Writer is Deputy Director at Nepal Rastra Bank. The views expressed here do not necessarily represent the views of NRB)</span></p>
<div>
	 </div>',
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			'created' => '2013-06-07',
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			'description' => 'As per the NRB’s latest data, the country has 31 commercial banks, 87 development banks, 80 financial companies and 21 micro-finance companies. The number shows that there is tough competition among banks and financial institutions (BFIs) forcing them to face multiple challenges. The major one is surely the capital base.',
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			'title' => 'Revisiting Nepali Consumers: Facts, Trends & Business Impacts',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="font-size: 12px;">Many believe that Nepal is still an under-explored market given the potential it has. The market is growing and chances of further expansion are still very high due to the increased awareness and affordability of consumers. The world’s leading brands available in Nepal have created an environment in which consumers can expect to get what they want. &nbsp;Every product has been putting their effort to get a hold in the market by expanding their consumer-base.&nbsp;</strong></p>
<p>
	<strong>Based on Purchasing Power Parity (PPP) Nepal’s Per Capita Income has doubled in 32 years. Recently released Human Development Report 2013 by the United Nations Development Program (UNDP) has revealed that the gross national income (GNI) per capita in PPP increased by 101 percent to US$ 1,137 in 2012 compared to 1980. Inflow of remittance and an large portion of youth population has made Nepal a potential market to companies.</strong></p>
<p>
	<strong>In this issue, New Business Age provides marketers and companies with some interesting insights to know the changing consumers landscape in Nepal.</strong></p>
<p>
	<span style="font-size: 12px;">In the capital Kathmandu, varieties of goods and shopping places can be found within a few minutes from their homes. People can find products according to their affordability. There are varieties of price ranges and choices to consumers. Family run groceries are still the norm in Nepal, but supermarkets and malls are also doing good business.&nbsp;</span></p>
<p>
	Despite economic slowdown, the consumption of fast-moving consumer goods (FMCGs) has not dropped but constantly going up. Nepal has been witnessing satisfactory growth in per capita food and non-food consumption expenditure. Household consumption of fast moving consumer goods (FMCGs) has also gone up. Multiple factors have contributed in expansion of Nepal’s market.&nbsp;</p>
<p>
	The visible growth of Nepal’s economy, especially income of the people, over the last decade has put more money in the pockets of the country’s middle class, prompting retailers to target this group of consumers.&nbsp;</p>
<p>
	<strong>Census 2011</strong></p>
<p>
	In the report of National Population and Housing Census 2011 published by the CBS, the population of the country has grown to 26.6 million with 1.35 percent annual growth rate since the last census that was concluded in 2001.</p>
<p>
	Thus, Nepal is the market of 26.6 million consumers including 12.8 million male population and 13.64 female. The census report shows that Terai region constitutes of 50.27 percent (13.31 million) of the total population. Similarly, hilly and mountain areas constitute 43 percent (11.39 million) and 6.73 percent (1,781,792) respectively.</p>
<p>
	Highlights:</p>
<ul>
	<li>
		Population: 26,494,505</li>
	<li>
		Households: 5,427,30</li>
	<li>
		Average household size: 4.88</li>
	<li>
		Sex ratio (number of males per 100 females): 94.2 (Number of male per 100 female)</li>
	<li>
		Urban population: 17 per cent</li>
	<li>
		Population density (average number of population per square km): 180</li>
</ul>
<p>
	<strong>Age Groups and Corresponding Market</strong></p>
<p>
	The age of the consumer determines the type of products sellable in the market.&nbsp;</p>
<p>
	Normally, a young person is fashion conscious in the choice of products, while a middle-aged person is status conscious.</p>
<p>
	The age group of 10-14 years of the population is seen the highest (when compared to other 5-year gap intervals) in Nepal as per the 2011 census data. Also, the female population is slightly more than that of males. There are 13,645,463 women in Nepal, which accounts for 51.5 percent of the total population, while the number of males is 12.84 million. &nbsp;Higher population of women shows that the market of cosmetics items, clothing and boutiques are very good in the country.&nbsp;</p>
<p>
	<img alt="Age Groups and Corresponding Market, Cover Story, Revisiting Nepali Consumers" height="304" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_age_group_and_corresponding_market.jpg" width="506" /></p>
<p>
	<strong>Youth Population</strong></p>
<p>
	The census data shows that more than half of the population, about 55 per cent, is below 25 years of age. According to the 2011 census report, some 34.91 per cent of the population is aged below 14 years and another 19.97 per cent is aged between 15-24 years.</p>
<p>
	This is one of the reasons why many world players are coming and establishing their presence here in the Nepali market. Young Nepalis today expect a lot more from their lives, and often face pressure that was unfamiliar to earlier generations. Young people often want to keep up with global fashions and market trends. Their passion of following global fashion and trends has created many opportunities in Nepali market. Though Nepali population is mostly young, the size of old-age population has been increasing as well offering increased opportunity for business that provide goods and services to aged.&nbsp;</p>
<p>
	<strong>Family Size and the Family Life Cycle</strong></p>
<p>
	The buying decision in a large family is more complex as several individuals play different buying roles, such as that of initiator, influencer, prayer, buyer and users, economist Dr Chiranjivi Nepal says. He opines that the large families generally buy a single brand while small families are found to be more brand-switching. Consumers’ product varies according to the stage of their family life cycle. The consumption pattern of a bachelor is different from that of a man with several children.</p>
<p>
	The average household size of Nepal is 4.88 as per the 2011 census data. The household size of the urban and rural was seen 4.32 and 5.02 respectively. The largest household size was seen in Rautahat district with 6.44 and the lowest of 3.92 in Kaski district.</p>
<p>
	<strong>Remittance</strong></p>
<p>
	Around 1,500 Nepali workers go abroad for employment every day and it is their remittance that keeps the Nepali economy afloat, opines economist Nepal.&nbsp;</p>
<p>
	According to the World Bank, Nepal ranked 6th in the world among top remittance-receiving countries in 2011, with remittances making up 20 per cent of its GDP. A total of 56 per cent of the total households in Nepal receive remittances. Of which, 48 per cent comes from international labour migration, according to Central Bureau of Statistics. Accounting for more than 20 per cent of the GDP, migrant labourers brought in Rs 359 billion in the last fiscal year alone.</p>
<p>
	<img alt="Remittance, Revisiting Nepali Consumers" height="206" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_remittance.jpg" width="515" /></p>
<p>
	<strong>Education</strong></p>
<p>
	Of the total population, 39.04 percent are at the level of primary education. The male population dominated all the regions of the country in the literacy level. 65.94 per cent of the total population are literate (can read and write) in Nepal. &nbsp;2.52 percent of the population of Nepal can read only as per census data. Kathmandu has the highest literacy rate and Humla, the lowest with 86.3 per cent and 47.8 per cent respectively. The school enrollment of Nepal is seen at 95.1 per cent as per census data. This means over 95 per cent of school going age population is actually enrolled in schools. This indicates to very good market for educational material and education-related services.</p>
<p>
	<img alt="Population Aged 5 years and above by Literacy Status, Revisiting Nepali Consumers, Cover Story" height="215" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_population_5years_above_literacy_status.jpg" width="528" /></p>
<p>
	<strong>Toilet Use</strong></p>
<p>
	More than one-third, i.e., 38.17 per cent of the Nepali population does not have toilet facility. In Terai region, a total of 51.24 per cent of population are still without toilet facility.&nbsp;</p>
<p>
	However, the trend of constructing the flush toilet and squat toilet with septic tank is increasing in the country including both in the rural as well as in urban areas. Therefore, the business of sanitary ware has also been going up.&nbsp;</p>
<p>
	<img alt="Toilet Use, Revisiting Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_toilet_use.jpg" /></p>
<p>
	<strong>Rural Market&nbsp;</strong></p>
<p>
	Though the business volume may be big in Kathmandu and urban areas, Nepali villages offer very good markets in terms of the number of consumers as about 82.30 per cent of the population of the country is living in rural areas.&nbsp;</p>
<p>
	Interestingly even some parts of the urban population &nbsp;have rural consumption behaviour. And urban characters can be seen also in some rural areas due to the influence of remittance, for example. However, purchasing capacity of rural community is low compared to urban population. Rural population still depends on agricultural activities. The consumption habit, however, has been changing in the rural areas too. One reason is the road access and the other is education. Also the availability of electricity and cable TV as well as opening of cinema halls in those rural areas have been changing the consumption habit in rural Nepal.</p>
<p>
	Many companies have been launching products targeting the rural population. Comparatively low-cost products and micro-packing are main strategies adopted by companies to get a hold in rural areas.&nbsp;</p>
<p>
	<img alt="Rural Market, Revisiting Nepali Consumers, Cover Story" height="86" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_rural_market.jpg" width="390" /></p>
<p>
	 </p>
<p>
	<strong>Fuel</strong></p>
<p>
	According to National Population Census 2011, Nepal still relies heavily on firewood to fulfill its fuel demand for the purpose of cooking. However, the consumption of Liquefied Petroleum Gas (LPG) has significantly increased in the recent years which has created lots of space for the business of LPG stoves, regulators, pipes, cylinders and other necessary accessories.&nbsp;</p>
<p>
	One interesting fact about source of fuel for cooking is that big urban districts like those in the capital (except Lalitpur), Parsa, Kaski and Morang do not feature among the top users of electricity. Obviously the frequent power outage and cheap price of LP Gas have prompted the households ot shift to LP Gas in those districts.</p>
<p>
	<img alt="Fuel, Revisiting Nepali Consumers, Cover Story" height="717" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_fuel(1).jpg" width="389" /></p>
<p>
	<strong>Lighting Sources</strong></p>
<p>
	Electricity is seen as the major source of lighting for Nepali households. Total of 67.26 percent of the population is using electricity as the source of lighting. Similarly, kerosene is the second major source of lighting (18.28 per cent). But these households suffer from frequent power outage.</p>
<p>
	This has created much opportunities for the traders of invertors and batteries as well as solar power systems.</p>
<p>
	Therefore, business of electricity accessories such as bulbs, wires, poles and ceiling lights is doing well in Nepali market. At the same time, business of solar energy has also gone up and possibility of bio-gas related business is also very high in the Nepali market.&nbsp;</p>
<p>
	<strong><img alt="Lighting Sources, Revisiting Nepali Consumers, Cover Story" height="607" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_lightening_sources.jpg" width="385" /><br />
	</strong></p>
<p>
	<strong>Religious Cultural Factors</strong></p>
<p>
	In September 2012, World’s famous fast food chain McDonalds launched its first vegetarian restaurants in India targeting Indian Hindu. The reason of launching vegetarian products was obvious that McDonalds did not want to lose Hindu consumers.&nbsp;</p>
<p>
	Cut-throat competition among various companies and outlets has created a scenario whereby all companies try to lure consumers by offering what they want. Nepal is multi-religion country and companies may want to tap consumers according to religion.&nbsp;</p>
<p>
	Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services.&nbsp;</p>
<p>
	<img alt="Religious Cultural Factors, Revisitng Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_religious_cultural_factors.jpg" /></p>
<p>
	<img alt="Cultural Composition, Revisiting Nepali Consumers, Cover Story" height="393" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_religious_cultural_composition.jpg" width="496" /></p>
<p>
	<strong>Absent Population</strong></p>
<p>
	One in every four households (25.42%; 1.38 million households) reported that at least one member of their household is absent or is living out of country. Total number of absent population is found to be 1,921,494 in 2011 census against 762,181 in 2001. The highest proportion (44.81 percent) of absent population is from the age group 15 to 24 years. Gulmi, Arghakhanchi and Pyuthan districts reported the highest proportion of their population being absent (staying abroad).</p>
<p>
	<img alt="Top five Absent Population District, Revisiting Nepali Consumers, Cover Story" height="153" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_absent_population_district.jpg" width="595" /></p>
<p>
	<img alt="Top Ten Destination of Migrant Nepali Workers, Revisiting Nepali Consumers, Cover Story" height="764" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_remittance_migrant_workers.jpg" width="380" /></p>
<p>
	 </p>
<p>
	<strong>Media Consumption</strong></p>
<p>
	The media consumption patterns, profiles of audiences on different platforms and media types, and the effectiveness of advertising across platforms have been significantly changed over the last decade.&nbsp;<span style="font-size: 12px;">Consumers concentration has been shifted to the television from radio, according to Managing Director at JWT-Thompson Nepal Joydeb Chakravarty. “Ten years back the national media was radio but today more people watch television,” he says.&nbsp;</span></p>
<p>
	<span style="font-size: 12px;"><img alt="Media Consumption, Revisiting Nepali Consumers, Cover Story" height="262" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_media_consumption.jpg" width="521" /><br />
	</span></p>
<p>
	<strong>Computer and Internet</strong></p>
<p>
	Computers and Internet products are also growing day by day. The number of Internet users in Nepal has accelerated in the country. Access to the Internet has positive implications for society and the economy. A study carried out by Computer Association of Nepal (CAN) last year showed that the computer penetration rate in the country had crossed five per cent. The survey was carried out based on the record of import of computer monitors and branded laptops, according to CAN general secretary Narayan Neupane. The penetration rate of computer at present may have crossed eight, he says, adding that the trend of using computers is on the rise since schools, health institutions, clubs and other social groups in far flung areas of the country have started using computers for their day-to-day activities.&nbsp;</p>
<p>
	<img alt="Computer and Internet, Revisiting Nepali Consumers, Cover Story" height="171" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_telephone.jpg" width="531" /></p>
<p>
	<strong style="font-size: 12px;">Automobiles</strong></p>
<p>
	Nepal has been seeing the penetration of two- and four-wheelers increasing at a rapid pace, thanks to the expansion of road connectivity and increased income of citizens. Expansions of road network throughout the country and a steep rise in the number of migrant workers have played a catalytic role in the growth of automobile sales.&nbsp;</p>
<p>
	So, many automobile brands have been able to establish themselves and automobile has become one of the largest customs duty contributors in the country. Nepali consumers have been using four-wheeler ranging from the most expensive one to the cheapest Nano car. Similarly, Nepal-assembled brands such as Mustang and Sherpa has also been rolling on Nepali roads. &nbsp;</p>
<p>
	<img alt="Top three districts with various Vehicles facilities, Revisiting Nepali Consumers, Cover Story" height="280" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_vehicles.jpg" width="533" /></p>
<p>
	<strong>ICT and Mobile</strong></p>
<p>
	Not only telecom sector but also the market of entire Information and Communication Technology (ICT) has expanded over the last few years. As far as mobile market is concerned, Nepal has approximately Rs 15 billion transaction every year, according to chairman of Mobile Traders Association of Nepal Purushottam Basnet. Nepal has been very potential market for mobile phone sets and other ICT products.</p>
<p>
	<img alt="Top three districts with ICT and Mobile, Revisiting Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_ict_mobile.jpg" /></p>
<p>
	<strong>Home Appliances&nbsp;</strong></p>
<p>
	Sales of the home appliances have tremendously increased over the last year. The sales of refrigerators, washing machines, vacuum cleaners, LEDs and LCDs has boosted in the recent years. Besides, people living in urban areas are continuously upgrading their living standards, and home appliances are deemed as components that add value to their living condition. The market of home appliances has also increased in the rural areas too.&nbsp;</p>
<p>
	<img alt="Top three districts with  Refrigerator facilities, Revisiting Nepali Consumers, Cover Story" height="160" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_home_appliances.jpg" width="532" /></p>
<p>
	<span style="font-size: 12px;">Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services.&nbsp;</span></p>',
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			'content' => '<address>
	<strong>Mani Raj Dahal</strong></address>
<address>
	<strong>Country Manager</strong></address>
<address>
	<strong>The Nielsen Company Nepal Pvt Ltd</strong></address>
<p>
	<span style="font-size: 12px;"><br />
	</span></p>
<p>
	<span style="font-size: 12px;">It is very important to assess how the market is doing and what the current trends of consumption are to revisit the consumers. Nepal is still an unexplored market in many fields and, therefore, it offers possibilities of market expansion to companies. It is worthwhile to mention here that the spending and consumption habit of consumers are positive in Nepal, despite the huge political problems the country is going through.&nbsp;</span></p>
<p>
	<strong>Rising Consumerism&nbsp;</strong></p>
<p>
	There is a tremendous potential in the country for companies to expand their products and services.&nbsp;<span style="font-size: 12px;">The swelling consumerism has seen the introduction of a range of new products like ready-to-eat snack foods, breakfast cereals, textures vegetable protein foods and so on. Different brands of the same item and attractive packaging vie &nbsp;for the consumers’ attention.</span></p>
<p>
	<strong>Spending Capacity</strong></p>
<p>
	The increased spending capacity of consumers is really a good sign in the Nepali market. &nbsp;The inflow of remittance and tourism have contributed to increase the income of consumers. The purchasing power of consumers has a direct impact on the market expansion.&nbsp;</p>
<p>
	Every investor asks some questions before starting a business: how big is the market and what are the possibilities of growing? And the scenario in Nepal is not so bad. Though Nepali market is not that big, there’s enough room for new companies and brands.&nbsp;</p>
<p>
	<strong>Youth Focused Market</strong></p>
<p>
	At present, the consumption of Nepali young generation forms a thriving market. Young consumers are usually impressed with branded and quality goods and services then being purely price sensitive . Companies and service providers can take advantage of this to further set up their brand image.<span style="font-size: 12px;">The young generation enjoys a staggering amount of purchasing power in the country due to foreign employment and inflow of remittance. Young consumers not only have money, but also have smart perspectives on how to&nbsp;</span><span style="font-size: 12px;">spend money.&nbsp;</span></p>
<p>
	<strong>Consumerism and Socialisation</strong></p>
<p>
	It is really interesting to mention here that Nepali culture has changed over the years due to technology and consumerism.&nbsp;<span style="font-size: 12px;">Our socialization process has changed, compared to some years ago. Lifestyle and consumption habits are considered to be the main reason for the socialization and it is obvious that the process of socialization has changed throughout the last one or two decades. For instance, we can take café culture, business in Valentine Day or may be English New Year.&nbsp;</span></p>
<p>
	<strong>Nepali Products</strong></p>
<p>
	Entrepreneurship is something that will help the country to achieve sustainable development. The chances of entrepreneurship are very high in Nepal, all we need is creative minds and creative ideas. In Nepal, the chances of branding local products are very high. Nepali people are very much habituated to consume Nepali food and drinks trend and young entrepreneurs can establish Nepali brands of that sector. The typical Nepali style goods are also making their brands .</p>
<p>
	<strong>Price Hike Impact&nbsp;</strong></p>
<p>
	It is an interesting fact that in Nepal, despite the frequent price hike of Fast-moving Consumers Goods (FMCG), the market has not seen a drop in the demand of such goods. This indicates that consumers have got the capacity and are willing to pay more for the products of their choice of consumption.</p>',
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		'Article' => array(
			'id' => '998',
			'article_category_id' => '40',
			'title' => 'When You Build Your Own Brand You Are Able To Command A Premium Rate',
			'sub_title' => '',
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			'content' => '<address>
	<strong><span style="font-size: 12px;">Joydeb Chakravarty</span></strong></address>
<address>
	<strong>Managing Director</strong></address>
<address>
	<strong>JWT-Thompson Nepal</strong></address>
<p></p>
<p>
	<strong style="font-size: 12px;">Excerpts:</strong></p>
<p>
	<strong style="font-size: 12px;">Some experts say that Nepal is still an untapped and unexplored market. Do you agree?</strong></p>
<p>
	Nepal was first country in the region to be exposed to international brands. Some 30 years back, India did not have the access and exposure to the brands that were here in Nepal. Nepali consumers have always been exposed to these kinds of international brands for last 30-40 years. So, when local brands try to enter this market they find it a challenge because consumers benchmark it with international brands that they have already used. It could be in any category, but the consumers give it a fair trial and if it does not meet their expectations then they have no hesitation in rejecting it. The Nepali consumers are very discerning indeed!</p>
<p>
	<strong>Can you please tell us some major differences in the consumers’ behavior in the past and present?</strong></p>
<p>
	Today the consumers have a different kind of exposure because of the reach and penetration of the international media. This has had very large impact to the consumers’ psyche. When you look at the way people dress, we see they are following the world’s leading trends. Nepali consumers’ tastes and trends have evolved over the last couple of decades. Look at the way they have embraced new technology, new gadgets and even smart phones. Look at two wheeler sector, earlier people went for something functional but not anymore. Now they want a higher-end bike to go with their perceived self-image. People have a much higher level of aspiration now, and want to show that through their material possession.&nbsp;</p>
<p>
	<strong>What are the practices of the companies regarding study of consumers’ buying behavior in Nepal?</strong></p>
<p>
	Client and organizations in Nepal are talking about research. Although, they might not always employ a professional research agency, they might want to do research in-house, through their own team, which is not the right way to do it, but it still goes some way. Earlier there a few companies who actually believed in market and consumer research but that’s changed. We now see that clients and companies are talking about research, which is a very positive sign.</p>
<p>
	<strong>How is the branding practice in Nepal? How important is branding from your perspective?</strong></p>
<p>
	Branding has caught on over the last two decades. Everything now seems to be branded. I am just not talking about the consumer goods, but commodities which at one time were sold loosely are now branded. Companies have now come to realize and appreciate that when you build your own brand you are able to command a premium rate.</p>
<p>
	<strong>What is the media consumption habit of Nepali consumers right now?</strong></p>
<p>
	If you see the ownership in the durables likes colour television (63% in 2012 Vs 13% in 2003), radio, refrigerator and mobile phones have drastically increased. Ten years back the national media was primarily radio based but today there are more people watching television than listening to the radio. Obviously radio has not been able to catch the imagination the listeners, while television has caught on despite having more than 350 FM radio channels in Nepal. The print too have taken its toll, readership has gone down over the last ten years even though literacy has gone up. The reason could be the high cover price of newspapers. The usage of the internet has gone up drastically from 2% in 2002 to more than 25% in 2012.&nbsp;</p>
<p>
	<strong>How do you envisage the importance of advertisement to catch the emotional side of consumers?</strong></p>
<p>
	If you are unable to connect with your customers on an emotional level, you will not be able to engage with them meaningfully. Consumers today have many interests and they are not waiting to see your advertisements! Unless you are able to make an emotional connection with your customers; make your advertisements distinctive, emotional, entertaining and engaging otherwise you cannot hope to catch their attention.</p>
<p>
	<strong>What are the contributing factors in the quality of advertisements? What are the reasons behind low quality of advertisement in Nepal?&nbsp;</strong></p>
<p>
	Over the last few years the quality of advertisements has not matched the expectation of the Nepali consumers. &nbsp;There are many reasons for that, no one wants to take a ‘risk’ and everyone wants to ‘play safe’. Companies feel that if they come up with a “creative” advertisement it might go over the head of their audience. There is very little the advertising agencies can do in that kind of a scenario. This is also compounded by the severe shortage of creative people in the advertising sector. Moreover, top quality advertising production – especially films cost huge amounts of money. The market here is very small compared to other countries&nbsp;<span style="font-size: 12px;">in the region.&nbsp;</span></p>',
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			'id' => '947',
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			'title' => 'New Year Hues: Products, Promises And People',
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			'content' => '<p>
	<strong>By Siromani Dhungana<br />
	<br />
	<br />
	<br />
	New Year Hues: Products, Promises and People</strong><br />
	<br />
	Outlets of the world&rsquo;s most famous brands have already started doing their business in Kathmandu providing consumers chances of more choices and selections. The powerful combination of sophistication in use of goods, changing lifestyle in the urban area and consumers&rsquo; access to information created by information and technology have brought about an unprecedented shift in the consumers&rsquo; brand use habit. On the other hand, it has created both opportunities and challenges for companies looking for potential buyers. Increased competition among various players has compelled them to lure customers by offering different packages. New Business Age tries to catch-up some existing market phenomenon in Nepal and explores the connection between products and people in the market.<br />
	<br />
	The fastest-growing middle and upper middle-class consumers have created many opportunities for companies in the Nepali market. Earning enough to afford quality brands and quality consumer experiences, the younger generation has become brand-focused and up to date with the latest arrivals. From gadgets, clothing and watches to other personal belongings, the new generation has become brand conscious and choosy.<br />
	&nbsp;<br />
	On the other hand, the increasing competition among different brands has forced companies to lure potential consumers by offering attractive packages. Various companies have been trying to lure consumers using various techniques including bumper offers, appointment of brand ambassadors, advertising campaigns in the media and other packages to ensure the success of their brands. Private business houses have been aggressively putting their effort to get a hold in the market, opines young entrepreneur Meele Shrestha of Maxlee Traders Pvt Ltd. New Year 2070 may not witness a drastic change in the market but it can create a different type of vibration, she adds.<br />
	<br />
	<br />
	<img alt="products" src="/userfiles/images/2070-1.jpg" style="margin: 10px; width: 400px; height: 280px;" /><br />
	<br />
	<strong>Marketing of Products</strong><br />
	<br />
	Marketers always think that if they want a product to catch on, they have to think up a catchy slogan or come up with a slick advertisement to create a buzz. It is really impossible to exactly assess what propels consumers to buy particular products.<br />
	<br />
	Advertising campaigns are not enough. Companies should also think about linking products to the environment and let the environment do the work besides the advertisement and other ways of publicity of products.Consumers&rsquo; behaviour is strongly influenced by subtle environmental cues. In Nepal, most consumers want to follow the wealthy population in terms of products consumption and buying. Availability, price structure and quality of products largely determine whether the product can hold the market.<br />
	<br />
	<br />
	<strong>Consumers&rsquo; Psychology</strong><br />
	<br />
	Even big companies around the world cannot always predict consumers&rsquo; psychology correctly. Sometimes, a simple product can create a trend in the market but other times even meticulously designed and decorated product may fail to attract consumers.<br />
	<br />
	Consumers&rsquo; decisions on products are driven largly by implicit associations with the imagery connected to a brand. And, sometimes their decision may be associated with the subconscious emotional appeal of products. Why and how people buy some products and not others? Consumers&rsquo; psychology is a specialty area that studies how our thoughts, beliefs, feelings and perceptions influence how we buy and how we relate to goods and services.<br />
	<br />
	<img alt="nepali market" src="/userfiles/images/2070-2.jpg" style="width: 400px; height: 266px; margin: 10px;" /><br />
	<br />
	<strong>Diversifying Nepali Market</strong><br />
	<br />
	Markets of various products and brands have a tremendous potential to expand in Nepal. The modern marketing approach is a post 1990 phenomenon, a large section of people is still out of the the modern market system leaving room for new and innovative companies to expand their presence. And that is happening too.<br />
	<br />
	Kathmandu has many outlets and high-end streets to showcase state-of-the-art brands of various products. The trend of opening modern outlets outside the Kathmandu valley is on the rise. Pokhara, Biratnagar, Dharan, Itahari, Birgunj among others are slowly waking up to the modern marketing approach.<br />
	<br />
	The population of Nepal as of June 22, 2011 stands at 26.49 million showing a population growth rate of 1.35 per annum, according to Central Bureau of Statistics. According to the Nepal Demographic and Health Survey, a total of 40 per cent of people are below 15 years of age and another 30 percent are between 15-49 years of age. Clearly, the country has a huge potential for products and brands. because of the large youth population.<br />
	<br />
	All companies need to win the hearts and minds of the consumers to get a foothold in the market. In this issue, New Business Age presents a consumer-focused story looking at various products and brands and they promises to the consumers for the New Year 2070 BS. It also looks at the preferences and opinions of some consumers from various segments of society:<br />
	<br />
	<br />
	<br />
	<strong>Automobile</strong><br />
	<br />
	Nepal has seen the penetration of two- and four-wheelers increase at a rapid pace, thanks to the expansion of road connectivity and increased income of citizens. Expansions of roads throughout the country and a steep rise in the number of migrant workers have played a catalytic role in the growth of automobile sales. So, many automobile brands have been able to establish themselves and automobile has become one of the largest customs duty contributors in the country. Nepali consumers have been using four-wheelers ranging from the most expensive one to the cheapest Nano car. Similarly, Nepal-assembled brands such as Mustang and Sherpa have also been rolling on the Nepali roads.<br />
	<br />
	In fact, the automobile market is all set to open a new avenue in the country. New Business Age has talked with highly popular automobile brands, Volkswagen and Honda, regarding their business prospects in Nepal (keeping the Nepali New Year 2070 BS in mind.)<br />
	<br />
	<br />
	<img alt="watch" src="/userfiles/images/watch.jpg" style="width: 400px; height: 248px; margin: 10px;" /><br />
	<br />
	<strong>Watches and Clocks</strong><br />
	<br />
	The Global Industry Analysts (GIA), Inc predicts that the global market for Watches and Clocks is poised to reach US$46.6 billion and US$5.4 billion, respectively, by the year 2017. In a report &lsquo;Watches and Clocks &ndash; a Global Strategic Business Report&rsquo; released last year, GIA has concluded that the recuperation in demand for luxury watches post recession, robust demand from developing markets especially the Asia-Pacific and rising popularity of fashionable, vintage and innovative models are forecast to drive market growth.<br />
	<br />
	The Nepali market for watches and clocks has been ballooning, say traders. Around 50,000 pieces of branded watches are sold every year in Nepal, according to them. Globally famous watch brands have already started their business in Nepal and are doing well. On the occasion of New Year, New Business Age has approached some top watch brands in the Nepali market. Most famous brands available in Nepal such as Rolex, Rado, Tag Heuer, Omega, Titanic and Esprit will focuse on advertising to attract consumers in the New Year, according to their authorised distributer in Nepal.<br />
	<br />
	<img alt="mobile" src="/userfiles/images/2070-6.jpg" style="width: 400px; height: 269px; margin: 10px;" /><br />
	<strong>Mobile</strong><br />
	<br />
	According to the latest data made available by Nepal Telecommunications Authority (NTA), Nepal&rsquo;s telephone penetration rate reached 70 per cent in mid- December 2012. The mobile handset market will go hand in hand with the mobile penetration rate and the trade in hand-held terminals that<br />
	&nbsp;<br />
	have increased significantly in the last couple of years. The annual transaction of mobile sets in the Nepali market stands at around Rs 13 billion, says president of Mobile Traders Association of Nepal, Purushottam Basnet.<br />
	<br />
	The cheaper series of android phones has created an &lsquo;android revolution&rsquo; in the country, he opines, adding that a mobile set was considered as a sophisticated personal belonging until not long ago, but it has now become an essential commodity.It is obvious the customers who the companies should always take care of, authorised sellers of mobile sets say. According to them, no special package has been developed so far focusing on Nepali New Year but consumers will definitely benefit due to increased competition and presence of many popular brands in the mobile market.<br />
	<br />
	<br />
	<img alt="wear/fashion" src="/userfiles/images/2070-8.jpg" style="margin: 10px;" /><br />
	<strong>Wear/Fashion</strong><br />
	<br />
	The young generation is &lsquo;fashionable&rsquo; and choosy. This generation also tends to emphasize brand value in their spending.It is very smart to follow the latest trends and embrace innovative fashion design. Today, those who can&rsquo;t afford a particular brand, would wait until they can.<br />
	<br />
	Fashion in Nepal is a fast growing industry with increasing events such as fashion weeks or beauty peasants. Now a days, many world famous brands are available in the Nepali market. Lee, Levis, Springwood, Northface, Jeanswest, Pashmina and others brands have succeeded to win the hearts and minds of Nepali consumers in the dress and fashion regime. However, some local designers, too, have made their presence felt.<br />
	<br />
	Dress and fashion-lovers in the town will have reason to cheer in the Nepali New Year because most of the dress brands and outlets are going to offer discount schemes or other packages. But it takes time to know the nature of the offers because brands do not want to reveal their special package in advance, because of competition.<br />
	<br />
	<br />
	&nbsp;<img alt="cosmetic" src="/userfiles/images/2070-11.jpg" style="width: 400px; height: 314px; margin: 10px;" /><br />
	<strong>Cosmetics</strong><br />
	<br />
	The country&rsquo;s cosmetics market has witnessed a rapid growth over the last couple of years. With each passing year, the availability of cosmetic products has increased significantly and the consumption rate has soared. There is no dearth of the world&rsquo;s leading cosmetic brands in the local market. Whatever you want, the market has it. Traders estimate that the country&rsquo;s cosmetic market is worth more than Rs 15 billion annually, and it is growing at the rate of 25-30 percent.<br />
	<br />
	A growing middle class and rising awareness about personal image and hygiene, which has resulted in greater spending on beauty and personal care products, has played a very constructive role on the rise of demand for cosmetic items. From globally recognized brands like Lakme, L&rsquo;Oreal, Garnier, VLCC and Emami to others like Mac&rsquo;s Lavera, Nova, Chase, Astaberry, Lotus and Ayur, the domestic market at current features around 80 brands of cosmetic products. The market is showing continuous growth, says Adhiti Adhikari of Laavanya brand.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>Airlines</strong><br />
	<br />
	Nepal saw a significant growth in air transport after the aviation policy was liberalised in 1992. The annual passenger movement reached around three million in 2012. According to Civil Aviation Authority of Nepal (CAAN), 31 international airlines are operating in Nepal. Similarly, 15 domestic companies, including nine fixed-wing and six helicopter companies, are also in operation.<br />
	<br />
	The prospects look bright with the private sector playing a leading role and investing billions in the industry. Buddha Air and Yeti Airlines have successfully proved their salt in the domestic market while internationally acclaimed companies such as Oman Air, Qatar Air, Jet Airways and Thai Air -- to name a few -- have also served the Nepali travellers well. Domestic airlines are all set to introduce some special packages to customers, international companies will also bring special offers targeting the Nepali New Year. For the time being, keep on guessing what offers domestic and international airlines may bring to attract travelers.<br />
	<br />
	<br />
	<img alt="liquor" height="312" src="/userfiles/images/2070-15.jpg" style="margin: 10px;" width="176" /><br />
	<br />
	<br />
	<strong>Liquor</strong><br />
	<br />
	There is a huge market for alcohol . The demand has been increasing each year due to the rise in household income, which comes from remittance inflows. There have been instances in some districts where most of the remitted money was spent on imported, high premium liquor.<br />
	<br />
	Both domestic and international brands have been doing their business in the Nepali market. Liquor is also a major source of revenue in the country. The overall business of restaurant and bar has decreased due to Mapase (a campaign against drunk-drive launched by Division of Metropolitan Traffic Police); but liquor business is still one of the evergreen sectors in the country.<br />
	<br />
	People had mostly negative perception about liquor in the Nepali society until some years ago. This perception has changed now and alcohol has become a part of daily life now. Whether it is a gathering or a grand party, it is not considered complete without liquor.<br />
	<br />
	Some famous liquor brands such as Antiquity, Ballentine, Royal Stag and Signature have already won the trust of middle class consumers. World-class brands such as Red Label, Black Label and Chivas Regal have also been doing good business in the Nepali market. It is for sure that many of us will be celebrating the occasion sipping of liquor according of our choice.<br />
	<br />
	<br />
	<strong><img alt="paints" height="231" src="/userfiles/images/2070-19.jpg" style="margin: 10px;" width="250" /><br />
	Paints</strong><br />
	<br />
	The paint market has thrived over the years, creating much space for paint companies to expand their market in the country. Rapid urbanisation, construction boom and growing awareness among customers have triggered the demand of paints, giving a leg up to the domestic paint industry, mostly joint ventures and subsidiaries of Indian multinational companies.<br />
	<br />
	The annual domestic demand for paints (including decorative and industrial categories) currently stands at around 40,000 metric tonnes, according to industry sources. The data released by Nepal Rastra Bank, there was a turnover of around Rs 4.10 billion in fiscal year 2011-12.<br />
	<br />
	Despite the slowed demand in the recent days due to recession in the construction sector, m a n u f a c t u r e r s observe that the market is growing. Demand of paint will never go down because a fresh coat of paint is always required even in old houses and people want to change the &nbsp;<br />
	colour to give a different look to their apartments and rooms.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>Housing</strong><br />
	<br />
	Nepal&rsquo;s real estate sector has been in an ailing state for three years now. The real estate and housing industry witnessed a speedy growth (which many say was an unnatural growth) until the Nepal Rastra Bank (NRB), regulator of the country&rsquo;s financial market, suddenly restricted banks&rsquo; lending to the sector in September 2010.<br />
	<br />
	The government planned to purchase houses and apartments for senior civil servants last year. The decision, could give a new lease of life to the cash strapped housing sector, is moving at a snail&rsquo;s pace. However, some positive indication of growth has been seen in the realty sector from the beginning of this year. According to real estate entrepreneurs and housing developers, this business has grown by 33 per cent in the first half of the current fiscal year, compared to the same period in the previous year.<br />
	<br />
	The New Year is expected to bring new hopes and new enthusiasm to the realty sector, opines secretary at Nepal Land ad Housing Developers Association (NLHDA), Bhesh Raj Lohani.<br />
	<br />
	<br />
	<strong>Computers</strong><br />
	<br />
	A study carried out by the Computer Association of Nepal (CAN) last year showed that the computer penetration rate in the country had crossed five per cent. The survey was carried out based on the record of import of computer monitors and branded laptops, according to CAN general secretary Narayan Neupane.The penetration rate at present may have crossed eight percent, he says, adding that the trend of using computers is on the rise since schools, health institutions, clubs and other social groups in the far-flung areas of the country have started using computers for their day-to-day activities.<br />
	<br />
	It is likely that the transaction of overall ICT products will double in the next few years. Internet penetration rate increased to around 23 per cent till mid- December, and the rise of Internet users will have a direct impact on the trade of computers, he claims. High competition among world class brands including HP, Dell, Asus, Compaq, MAC, Sony, Lenovo and Acer have not only contributed to lower the price, due to hard competition, but also have provided quality products to Nepali customers.<br />
	<br />
	&nbsp;</p>
<p>
	&nbsp;</p>
<p>
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;New Year is Definitely a High Season for Passenger Cars&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="sarik" src="/userfiles/images/SARIK.jpg" style="width: 150px; height: 144px; margin: 10px;" /><br />
	SARIK BOGATI<br />
	<br />
	Head of Marketing, Pooja International (authorised distributer of Volkswagen)</strong><br />
	<br />
	<br />
	<strong>Can you please tell us briefly the overall business scenario of your product in the first quarter of 2013?</strong><br />
	<br />
	The year 2013 seems to be very lucky for Pooja International and the automotive division of Vishal group. Talking about the Volkswagen Brand, we have very good starting with arrivals of fresh 2013 models of Polo and Vento from India. There are many updates in the features like bluetooth in steering control, auto Aircon in Polo, increased leg room, introduction of new colours in cars, new alloys and black headlamps. We have started receiving the New Tiguan, Golf and New Touareg, which are also catching up the market. As a corporate strategy, the automotive division of Vishal Group has expanded its wing in a new segment with acquirement of dealership of &lsquo;Kobelco&rsquo; construction equipment in February 2013.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter, i.e., April- June, 2013 as the Nepali New Year sets in?</strong><br />
	<br />
	New Year and spring season is definitely high seasons for passenger cars. We have so many bankers in queue waiting to upgrade to Volkswagen in this season. Moreover, we will have more cars coming in this quarter from both Germany and India. Now, we can supply the cars to the customers who have been booking and waiting for months. We are very hopeful of the next quarter.<br />
	<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are the main features of your products/brands?</strong><br />
	<br />
	Kobelco construction equipment definitely is an exciting brand and has amazing performance machines which we will offer this year. Moreover, we are expecting some new models and facelifts of Volkswagen coming from India this year.<br />
	<br />
	<br />
	<strong>Can you please provide the price ranges?</strong><br />
	<br />
	We really can&rsquo;t say the price now. But the price would be similar range at what we are offering now.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular especially in the next month: April (Baisakh)?</strong><br />
	<br />
	We would be more focused on branding.</p>
<p>
	&nbsp;</p>
<p>
	&nbsp;</p>
<p>
	<br />
	<br />
	<strong>&lsquo;Toyota Starts to Book New Product Etios Targeting Nepali New Year&rsquo;<br />
	<br />
	<br />
	<img alt="" src="/userfiles/images/SAHARA.jpg" style="width: 150px; height: 151px; margin: 10px;" /><br />
	<br />
	SAHARA KC<br />
	Executive Divisional Manager<br />
	United Traders Syndicate (UTS)<br />
	(authorised dealer of Toyota in Nepal)</strong><br />
	<br />
	<br />
	<strong>Could you please tell briefly the overall business scenario of the produt/brand?</strong><br />
	<br />
	After a hugely successful business year, Toyota now is facing a mild slowdown in terms of sales, which can be ascribed to the recent economic crunch and inability of Toyota to meet the existing demand. The first quarter of this year is almost gone by in the anticipation of launching our new product Etios.<br />
	<br />
	<br />
	<strong>What are the expected returns within the next quarter?</strong><br />
	<br />
	The next quarter is expected to bring a boom in our business with the launch of our highly awaited product Etios. As the Nepali New Year approaches, we will be accepting bookings for the car. Looking at the large number of inquiries about the product, we are expecting a lot of bookings prior to the launch.<br />
	<br />
	<br />
	<img alt="sahara" src="/userfiles/images/sahara1.jpg" style="margin: 10px;" /><br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are the main features of your brands?</strong><br />
	<br />
	As of now, we do not have any new product offering for New Year but we are expecting sales of the product that we have in our offering. Avanza, Hilux, Fortuner, Corolla, Yaris are a few products that we expect to sell more.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular?</strong><br />
	<br />
	Apart from our regular promotional campaigns and promotions for Etios that we will begin from the next month, the launching of Etios will be something the city has never witnessed before. We are focused on making the event an eye catcher for not only our customers and prospects but for anyone who gets a mere glimpse of the event.<br />
	<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;December to January is Considered a Dull Period&rsquo;<br />
	<br />
	<br />
	<img alt="rahul" src="/userfiles/images/RAHUL.jpg" style="width: 150px; height: 143px; margin: 10px;" /><br />
	<br />
	RAHUL DHANUKA<br />
	Brand Manager<br />
	Esprit Watch</strong><br />
	<br />
	<br />
	&nbsp;<br />
	<strong>How do you see the possibility of the business in the next quarter?</strong><br />
	<br />
	With the Nepali New Year approaching, people will certainly start feeling the heat of summer. The watch business is likely to rise because of the change of season. People tend to spend more on watches in summer than in winter. Moreover, the New Year will bring festive mood back. So, people will spend comparatively more than in any other time of the year. We also have the latest collections in store, so watch lovers can try out new collections that will certainly match the latest trend and fashion.<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are main features of your products/ brands?</strong><br />
	<br />
	We have several brands available at all our outlets. Most recently launched brands are Esprit and Pierre Cardin. The brands trendy and casual models. Few most sought other products and brands are: Fossil and Kenith Cole.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of these brands?</strong><br />
	<br />
	The price ranges from Rs 10000 to Rs15000.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products popular in the next month?</strong><br />
	<br />
	We have three outlets for our products and all of them are located in prime areas like Durbar Marg, City Center and Blue Bird Mall. We are using different branding and promotional strategies. We mainly focus on the print media like different magazines, newspaper, hoarding boards, etc. We have also started targeting our customers through social media like Facebook and Twitter. Fan pages on facebook have helped us a great deal to attract young mass towards our products.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Today is What Technology Stays on, Tomorrow is Where it Moves Ahead&rsquo;</strong><br />
	&nbsp;</p>
<p>
	<img alt="sachin" src="/userfiles/images/SACHIN.jpg" style="width: 150px; height: 148px; margin: 10px;" /><br />
	<br />
	<strong>SACHIN UDAS<br />
	Marketing Manager, Teletalk (authorised distributer of Colors Mobile)</strong><br />
	<br />
	<br />
	<br />
	Colors is one of the most popular mobile set brands in the country. It has full ranges of mobile phones from basic level to touch-based lifestyle phones, along with CDMA and hi-end smartphones. Colors is a reliable brand with one year of warranty.Colors has the largest network with 18 service centres from East to West. Colors operates after-service follow-ups to assure customers are satisfied with the products.<br />
	<br />
	Colors brand believes in value transferring. We have four major series of Phone: Fighter, Lifestyle and Touch, CDMA and X-factor series. Fighter series consists bar phones with basic features, which can play MP3/ MP4. Fighter series is very popular all over the country. Lifestyle and Touch Series offers multi media facilities like touch screen. Colors&rsquo;s has introduced smartphones under X-factor series. In less than a year, the company has taken good market share of smartphones.We will have entry level android phones, which we want in every teen&rsquo;s hand so that they can explore different apps that are useful in learning languages and also for other purposes. We believe that the android is the key for Nepali teens to experience and explore possibilities of technology.<br />
	<br />
	Colors&rsquo;s X-factor tablets will be soon arriving to the market. It will come in 7 inch and 8 inch screen sizes with 3G SIM compatibility.&nbsp; Colors brand believes that today is what technology stays on, tomorrow is where it moves ahead.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;New Year is Expected to Bring New rays in Summer Sale&rsquo;<br />
	<br />
	<img alt="achal" src="/userfiles/images/ACHAL.jpg" style="width: 150px; height: 164px; margin: 10px;" /><br />
	ACHAL AGARWAL<br />
	Director<br />
	JeansWest, Nepal</strong><br />
	<br />
	<br />
	<br />
	<strong>Can you tell us briefly the overall business scenario of your products in the first quarter of 2013?</strong><br />
	<br />
	The overall business scenario was very exciting during the first quarter. It has been two years since we introduced our brand in Nepal and people have responded well to the product.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter as the Nepali New Year sets in?</strong><br />
	<br />
	We expect a good sale during April-June since it is summer and people come to buy summer goods.<br />
	<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are their main features?</strong><br />
	<br />
	We have lots of products including T-shirts, half shirts, quarter pants, pants and summer jeans (for men and women) in the New Year.<br />
	<br />
	The main features of our brand are:<br />
	<br />
	a. Company controlled prices: This has become one of the major factors behind our brand to be so successful within such a short span of time. Our products are almost 30 per cent less priced than the similar kind of goods in the market.<br />
	b. Quality: JeansWest is known for its quality in Australia and worldwide markets.<br />
	c. Brand: JeansWest is a very big brand of Australia and so people know about this brand making it very easy for us to get established in the market.<br />
	d. Variety: At JeansWest, we have a very wide range of products.<br />
	e. Size and Fit: JeansWest products have been received well in the Nepali market because of their sizes and fittings for Nepali people.<br />
	<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of the same?</strong><br />
	<br />
	Price ranges from Rs 990 to Rs 4000.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular in the New Year 2070 BS?</strong><br />
	<br />
	Paper media and hoarding boards will be our main marketing strategies in the New Year.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Customer Satisfaction is a Must to Make Products Popular and Desirable&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="dilip" src="/userfiles/images/DILIP.jpg" style="width: 150px; height: 168px; margin: 10px;" /><br />
	DILIP KC<br />
	Sports Plaza Pvt Ltd<br />
	(Authorised distributer of Reebok, Rockport and Lee brands)</strong><br />
	<br />
	<br />
	<br />
	&nbsp;<br />
	<strong>Could you please tell us briefly the overall business scenario of products in the first quarter of 2013?</strong><br />
	<br />
	Sports Plaza Pvt Ltd covers Reebok, Rockport and Lee brands, which are one of the best apparel and footwear brands in the world. January 2013 sets in with winter at its peak and as the brand covers an entire range of winter apparels, footwear and accessories, we do not need to worry much about sales and acceptance of our products by our customers. These are world class products with the best designers putting in latest trends in fashion and comfort. They also involve new technologies in footwear and even in fabrics, not available in general.<br />
	<br />
	<br />
	<strong>How do you see the possibility of the business in the next quarter as the Nepali New Year sets in?</strong><br />
	<br />
	We are very optimistic about the business in the next quarter, when we will put our summer arrivals on display, welcoming spring summer with latest and the best in designs and the quality fabrics best suited for our customers. The lightweight footwear and air flow technologies are ultimate in comfort and style. We are sure of high sales volumes in spite of tough competition from other brands.<br />
	<br />
	<br />
	<strong>What are the main features of your products?</strong><br />
	<br />
	As already mentioned, Reebok is a premium sports brand always putting in highest standards of quality and workmanship, both on their footwear and sports apparels. The main features are light weight and best quality fabrics available in the industry with the latest technologies that goes into making them. To mention a few, the fabrics are play dry, which keep our body cool even in peak summer, zig fabrics which are proven to give back the energy dissipated from the body during workouts and exercising and the easy tone range &ndash; helping to tone the body muscles.<br />
	<br />
	Rockport is a trendy leather footwear range for men offering great style and comfort. Also the high technologies that go into Leather processing, The sole, and the workmanship required to make them. Lee is a casual fashion brand with best Denims and cottons available in the market. The designs, quality and price range has been well accepted in the market.<br />
	<br />
	<br />
	<br />
	<strong>Can you please provide the price ranges?</strong><br />
	<br />
	As there are many varieties of products, it would not be possible to cover the prices on this short space. However, if you want prices for some specific product range, we shall be glad to provide the same.<br />
	<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular?</strong><br />
	<br />
	We strongly believe that our customers&rsquo; satisfaction is the most desired strategy that would make our products popular and desirable. However, we can never undervalue the great cooperation and good wishes of our media friends from all publishing houses and advertising agencies, who have worked hard making great designs and offering us the best coverage available.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;We Want to Strengthen Laavanya Brand in the Coming Year&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="aditi" src="/userfiles/images/ADITI.jpg" style="width: 150px; height: 143px; margin: 10px;" /><br />
	ADITI BHATTARAI<br />
	Business Development Manager Laavanya Luxury Ayurveda</strong><br />
	<br />
	<br />
	<strong>Can you tell us briefly the overall business scenario of your brand in the first quarter of 2013?</strong><br />
	<br />
	This quarter has been significant for the company as we celebrated our first anniversary in February along with the commercial launch of our sales in the United States. This event has reinforced the strength of Laavanya as both national and international brand. We want to build on this perception and strengthen the brand further for the year.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter, i.e., April- June, 2013 as the Nepali New Year sets in?</strong><br />
	<br />
	April to June is a special season for all our products because we have special events like New Year and wedding season of Baisakh and Asadh. Our products make great gifts for occasions like these. Our cleansing products like the Royal Saffron Ubtan (known as Bukuwa in Nepali) have special significance on wedding rituals and can be used by the brides (and their families) for beautifying as well as religious purposes. Last year, this period brought us the best sales and business prospects in the entire year.<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are their main features?</strong><br />
	<br />
	Taking the season into consideration, we will be promoting our cleanser, face mask and moisturizers this quarter. The cleanser (Royal Saffron Ubtan) and Face Mask (Mukha Kantibarkdhak Powder) are designed for all skin types and are beneficial in windy season, especially in Kathmandu where the effects of dirt from the street impact the skin directly. These products gently remove dirt particles and leftover make up, can be used daily.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of those products?</strong><br />
	<br />
	Royal Saffron Ubtan-Rs 1250<br />
	Mukha Kantibardhak Powder-Rs 1250<br />
	Radiance Cream-Rs 1650<br />
	Deep Nourishing Cream-Rs 1950<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular especially in the next month?</strong><br />
	<br />
	We mostly focused on personal selling and word-of-mouth publicity this past year. In this quarter, we will be focusing on advertising through the print media and social media. We have used social media effectively in conveying the benefits of Ayurveda and our products and how and when to use them, we want to give continuity to that. We will also offer a special discount offer for New Year.<br />
	<br />
	&nbsp;</p>
<p>
	<br />
	<strong>&lsquo;Overall Business scenario is Good in the First Half of the Current FY&rsquo;</strong></p>
<p>
	&nbsp;</p>
<p>
	<img alt="bhesh raj lohani" src="/userfiles/images/bhesraj.jpg" style="width: 150px; height: 167px; margin: 10px;" /><br />
	<strong>BHESH RAJ LOHANI<br />
	Managing Director<br />
	Green Hill City Pvt Ltd</strong><br />
	<br />
	<br />
	<br />
	<strong>How is overall business of housing sector?</strong><br />
	<br />
	Green Hill City is the largest housing industry in Nepal. It will be developing around 800 units in 320 ropanies of land. As regarding the overall business scenario the product sellings are quite good in the first half of the current fiscal year. Out of 490 units constructed by the company, 130 units have been sold and ownership of 96 units had already been transferred.<br />
	<br />
	<br />
	<strong>What are the main features of Green Hill City&rsquo;s products?</strong><br />
	<br />
	We have two different products: acquiring land and constructing houses by consumers themselves and purchasing completed houses. Green Hill City is committed to providing quality services and best housing products to its customers. We have targeted all types of consumers ranging from the middle class to the upper class.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges?</strong><br />
	<br />
	The price of housing units and colonies constructed by Green Hill City ranges from Rs 6.7 million to 30 million.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular?</strong><br />
	<br />
	Till date we have been promoting our publicity strategies through newspaper advertisements, TV promos and hoarding board. The next campaign consist of a number of sales executive going the various corporate house providing the information about the products through direct marketing by the help of brochure and flyers.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Nerolac Produces Many Ranges of Products&rsquo;</strong></p>
<p>
	&nbsp;</p>
<p>
	<br />
	<img alt="rajendra" src="/userfiles/images/rajendra.jpg" style="width: 150px; height: 232px; margin: 10px;" /><br />
	<strong>RAJENDRA DESAI<br />
	Country Head<br />
	Nerolac Paints</strong><br />
	<br />
	<br />
	Considering the market&rsquo;s feedback, the paint market is opening and the season is starting after the winter. Cold weather is almost gone and we see a bright sun every day, which will help to increase the sales of paints and allied products. The construction activities are in full swing, these means an increased demands of paints. Paint sales in the first quarter will be much higher than in the last quarter, and it is expected that the trend will continue in the coming months. We will have 3 per cent more than last year. We have started producing various ranges of Nerolac products, along with existing range of Nepal Shalimar brands. We are keen to market super premium products both for exterior and interior use.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;ICT Market is Always Looking to Give Better and more Suitable technology&rsquo;<br />
	<br />
	<br />
	<img alt="" src="/userfiles/images/nabin.jpg" style="width: 150px; height: 160px; margin: 10px;" /><br />
	NABIN JOSHI<br />
	Assistant General Manager<br />
	Astral Computers Nepal Pvt Ltd</strong><br />
	<br />
	<br />
	<strong>Can you please tell briefly the overall business scenario of the ICT products in the first quarter of 2013?</strong><br />
	<br />
	The first three months seem good in terms of business prospects. Because the CAN InfoTech 2013 was held in the same quarter, the promotion of IT business was better compared to previous quarters. Due to CAN InfoTech, we were able to reach the end user as well as corporate customers. Therefore overall business scenario of ICT products looks bright.<br />
	<br />
	<br />
	<strong>How do you see the possibility of the business in the next quarter?</strong><br />
	<br />
	Along with consumers&rsquo; positive perception, ICT sector needs favorable and appropriate policies to grow. Despite of all above causes, the purchasing trend from organisations has increased. So, we are expecting the same situation, even with better possibilities in the next quarter.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make ICT products more popular?</strong><br />
	<br />
	Nepal&rsquo;s IT market is price driven. However, ICT products do not adapt to a single strategy for better publicity.<br />
	Apart from price, we also educate customers and suggest them the right product to enhance the productivity. Educating customers means building long term relationships, which enables to win their trust. In order to get more publicity about our products, we are trying to reach more and more customers, listening to their requirements and suggesting them the best option.<br />
	<br />
	<br />
	&nbsp;</p>',
			'published' => true,
			'created' => '2013-04-17',
			'modified' => '2013-07-28',
			'keywords' => 'new business age cover story news & articles, cover story news & articles from new business age nepal, cover story headlines from nepal,  current and latest cover story news from nepal, economic news from nepal, nepali cover story economic news and events,  ongoing  cover story news of nepal',
			'description' => 'Outlets of the world’s most famous brands have already started doing their business in Kathmandu providing consumers chances of more choices and selections. The powerful combination of sophistication in use of goods, changing lifestyle in the urban area and consumers’ access to information created by information and technology have brought about an unprecedented shift in the consumers’ brand use habit.',
			'sortorder' => '826',
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	(int) 8 => array(
		'Article' => array(
			'id' => '896',
			'article_category_id' => '40',
			'title' => '‘We Need To Develop Our E-commerce First’',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong><img align="right" alt="Sanjay Golchha, Golchha Organization" height="313" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_sanjay.jpg" style="margin:0 0 0 10px;" width="274" /><span style="color:#3ab0c4;"><span style="font-size: 22px;">'We need to develop e-commerce first'</span></span></strong></address>
<address>
	<strong><br />
	</strong></address>
<address>
	<strong>Sanjay Golchha</strong></address>
<address>
	<strong>Director</strong></address>
<address>
	<strong>Golchha Organization</strong></address>
<p>
	<strong style="text-align: justify;">What is an example of media convergence in Nepal due to the advent of new communication technologies?</strong></p>
<p style="text-align: justify;">
	Digital media is the most useful form of media for the advertisers. Online marketing has not been fully explored in Nepal. Although social media sites like Facebook have high usage in Nepal, advertisements on facebook are not very effective. Media convergence has only recently started making some impact. People do not understand the power of the digital media. Only international contents can be found in online ads, not the local content.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What has been the most useful communication technology convergence in the Nepali media?</strong></p>
<p style="text-align: justify;">
	To make use of communication technology in Nepal, e-commerce should develop first. It is not developing due to social and technical inefficiencies in Nepal. Online digital ads will be prominent on the Internet or on the websites only after we have a developed e-commerce business.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What has been the impact of media convergence on Nepal’s media industry?</strong></p>
<p style="text-align: justify;">
	The impact of media convergence will come slowly. This requires economic development and political stability in the country. This can provide a platform for the ecommerce businesses to develop more content. People are not using the online media to buy things online. Due to the poor financial situation of the country, people are not in a hurry to buy anything. They want to use their time to choose the products they want to buy. Another thing is, even if the people were interested in buying products online, the online payment system has not yet come into practice. Firstly, they cannot pay and secondly they cannot trust buying products online. Hence, there are many pending issues with regard to media convergence. First, the Nepali commerce and media industry should develop; the ads will follow later.&nbsp;</p>
<p style="text-align: justify;">
	<strong>How long shall it take to make a full impact?</strong></p>
<p style="text-align: justify;">
	The impact of media convergence can be seen soon. But, for this the Internet bandwidths should be cheaper and the Internet should be more accessible to the people. Online payment systems should also be developed and promoted. Due to the conservative financial system, online payment is difficult. Domestic payment systems should be prioritized and the international payment systems will automatically develop. The world is globalized today and lack of an online payment system is a major disadvantage to us. Businessmen should invest in e-commerce development. More pioneers are required. E-commerce websites like Thamel.com and Muncha.com are well established businesses. Airlines have also advanced in this sector. Buddha Air, Yeti Air and others as well have already started providing online reservation service to their customers.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What are the changes required in the media industry to adapt to the changes of media convergence?</strong></p>
<p style="text-align: justify;">
	They can also be explored for business development but this has not been done at all.&nbsp;</p>
<p style="text-align: justify;">
	If providing Internet on the phone brought a lot of profit to the mobile phone companies, then development of online payment system will be even more profitable. Nepal is a tourist destination. The tourism industry flourishes throughout the country. But, it is difficult for the tourists to learn more about Nepal before their visit. Tourism related websites are advertised in the international online media to attract tourists. However, when they want to make a hotel reservation to ensure that they already have a place to stay before visiting the country, it is not possible. Similarly, products like coffee and carpets that are exported abroad cannot be advertised properly. The major reason for this is the lack of an online payment system.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What can the advertisers do in order to benefit from the changes of media technology convergence?</strong></p>
<p style="text-align: justify;">
	We need to invest in e-commerce. This can help local businesses to reach customers around the world. Lack of an online payment system is a loss for tourism-dependent <strong>businesses like hotels and travel agencies as well as the exporters. The payment taking mechanism is difficult which is why the online advertising is not fully developing.</strong></p>
<div style="background:#fcf88d;padding:5px;">
	<p style="text-align: justify;">
		<strong>The Paradigm Shift</strong></p>
	<p style="text-align: justify;">
		There has also been a shift in terms of media’s target consumers. Traditionally, the primary market was the target of media companies. The primary market included television viewers, radio listeners, website surfers, and newspaper and magazine readers. While the secondary market includes the marketers, the competing companies and other media as well. There has been a convergence in these two groups as now they both are targeted equally by the media companies.&nbsp;</p>
	<p style="text-align: justify;">
		Sanjay Golchha is also involved with Mindshare Nepal, which is a digital marketing company, the first of its kind in Nepal. It is the authorized agent for GOOGLE in Nepal and works in close relation with the businesses companies of Nepal. They are involved in Search Engine Marketing (SEM), which is the biggest source of online advertisements. They are also focusing upon social engineering, advertising the tourism and travel websites as well as promoting export products online. Currently, their major focus is upon providing email-marketing services to the local businesses. &nbsp;Mindshare Nepal Pvt. Ltd. collaborates with two companies who are experts in Software (IT Nepal) and marketing (Linez). Email marketing allows the businesses to reach thousands of people with a single message and see their response instantly.&nbsp;</p>
</div>
<div>
	 </div>',
			'published' => true,
			'created' => '2013-03-24',
			'modified' => '2013-03-24',
			'keywords' => '',
			'description' => 'The impact of media convergence can be seen soon. But, for this the Internet bandwidths should be cheaper and the Internet should be more accessible to the people.',
			'sortorder' => '778',
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	(int) 9 => array(
		'Article' => array(
			'id' => '895',
			'article_category_id' => '40',
			'title' => '‘Companies Should Focus On Building Brands, Not On Selling Units’',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong><img alt="Abhaya Pandey" height="254" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_abhaya.jpg" width="250" /><br />
	</strong><strong>Abhaya Pandey</strong><strong>Advertising Professional</strong></p>
<p>
	 </p>
<p style="text-align: justify;">
	<strong>How is media convergence affecting Nepal’s advertising industry?</strong></p>
<p style="text-align: justify;">
	Online Media is an example of the impact of Media Convergence in Nepal but it has not been able to make a significant impact yet. There are very few Internet users. We are still relying on the digital media as the prominent source of advertisement. &nbsp;</p>
<p style="text-align: justify;">
	<strong>How has Social Media Education (SEM) changed over the years?</strong></p>
<p style="text-align: justify;">
	While social media education advertisements were mostly like BCC (Behaviour Change Consumerism) previously, today ad literacy has increased. This also requires more ad communication experts to convey social educational messages in an entertaining manner. The challenge today is not only giving information but also persuading consumers to buy the product or the message. While traditional media required information education, today information has to be conveyed through entertaining ads that can easily grab the people’s attention. Education is possible through entertainment only. Functional value is changing. Humour, fear campaigns, sensationalization etc should be embedded into ads to make them both entertaining and educational. Only educational ads will make people switch between TV channels. The government, NGOs and INGOs should be more responsible towards SME.</p>
<p style="text-align: justify;">
	<strong>How is the “Brand Personality” of a company reflected in its advertisements?&nbsp;</strong></p>
<p style="text-align: justify;">
	Sixty per cent of the total cement consumed in Nepal is produced in Nepal; only the remaining 40 per cent is imported. This clearly suggests a lack of competition in the domestic market. Many companies are trying to establish their brand names in the cement industry but special emphasis has not been placed in making better advertisements for those brands. The richest organizations of Nepal, the banks are limited to the urban areas and are yet to reach the villages. Hence, there is not much competition in the banking sector as well. Brands are classified in terms of the advertisements that they demand. Clients should think long-term. They should focus on building brands and not only on selling units. The market of instant noodles can be called competitive and this is reflected in &nbsp;their advertisements as well. People can easily associate more with the noodle brands than with others.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What is the biggest challenge in the advertisement sector today?</strong></p>
<p style="text-align: justify;">
	The biggest challenge for Nepali business companies is to use advertisements to grab the people’s attention first and then to convey the message of the brands. Some ads are very descriptive which makes them absurd instead of creative. This can lead to a disconnection between the brand message and the advertisement message. It’s only a tool. Ideas combined with technology are necessary to create better advertisements and awesome brand images. The market is changing from supply-oriented to demand-oriented. More competition and professionalism is required in the corporate houses. Only after these basics are met, the companies can focus on creativity and design of their brands. If the brands and production companies start focusing upon brand image today, they will be able to stand out even 25 years from now. Glossy ads are not always creative ads.</p>
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			'description' => 'Online Media is an example of the impact of Media Convergence in
Nepal but it has not been able to make a significant impact yet.  There are very few Internet users. We are still relying on the digital media as the prominent source of advertisement.',
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			'title' => 'Media Convergence: Impact On Business',
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			'content' => '<p style="text-align: justify;">
	<span style="text-align: justify;">Media convergence is a theory, and subsequently a practice, in communications where every mass or niche medium eventually merges with each other to the point that they are indistinguishable from each other, creating a new medium from the synthesis, due to the advent of new communication technologies. With the advent of new medium over the Internet and the mobile, media convergence is now an increasing reality in the Nepali media and entertainment industry.&nbsp;</span></p>
<p style="text-align: justify;">
	A prominent example of media convergence in Nepal is the online media. It has had a significant impact upon the conventional print and broadcasting media. Globally, it has proved to be very influential. In the USA and other developed nations of the world, everyone uses advanced technologies such as &nbsp;iPhone, Blackberrys and other gadgets that help them stay updated every second. People do not wait for the next day to read the newspapers. The online news portals get updated every minute with new news flowing in. According to Suresh Prasad Aacharya, Academic Advisor at the Shepherd College of Media Technology, such an example can also be seen in Nepali radios. Radios provide news bulletins every hour. The same news is followed by the televisions and is viewed by the audience in the evening.&nbsp;</p>
<p style="text-align: justify;">
	The online portals also update the news. Next morning, almost the same news is printed in the newspapers. Again, the radios conduct programmes in they which repeat the same news they broadcast a day ago. Hence, a cycle of convergence can also be seen in Nepal as the news reports get reproduced again and again by various forms of media. This is beneficial to the media consumers as they can stay updated through various forms of media. But this process weakens the media houses. Reporters can also benefit from this cycle. Most of the print media located outside the valley use online sources for the news. &nbsp;</p>
<p style="text-align: justify;">
	<strong>Challenges in Convergence</strong></p>
<p style="text-align: justify;">
	While the industry at large is excited about media convergence, it also has its share of concerns. The unanimous one is the lack of adequate bandwidth. The bandwidth cost is too high and needs to be brought down drastically. In Nepal, Internet usage is very low. The fact that 18 per cent of the population uses the Internet is exaggerated. Hence, this makes it difficult for the media companies to use the Internet to communicate with their audience. Only 5-6 per cent Nepalis have been able to make effective use of the Internet. &nbsp;In Korea, there are half-a-million subscribers who receive 11 channels live on their mobiles. Only when there is enough bandwidth, can the business be ramped up.</p>
<p style="text-align: justify;">
	The other challenge is educating consumers to use the various new media. The latest technologies such as HD camera and the latest software are not being utilized to the full extent. &nbsp;Though we capture advertisements in HD (High Definition), it is shown in SD (Standard Definition). This has been making a little difference in quality but the full potential of technology remains unexplored. Consumers here have some access to the latest technological goods but consumer education for their proper usage is not being encouraged. The industry will not grow unless the consumer is educated and aware of the available technologies and their usage.</p>
<p style="text-align: justify;">
	Apart from reaching consumers at various touch-points through convergence of the media, companies are also looking at it as a media to cater to the individual needs of consumers. And for this, the need of the hour is to generate adequate content. The Nepali media lacks the competition to generate adequate content. Producers are not compelled to make better advertisements. Advertisements are reflections of the competition among the brands. The clients want only glossy ads. They have a conservative mentality, as they want to stay 125 per cent secure. They prefer traditional, tried and tested methods that are still selling. Bringing creativity in media and advertisements requires more courage and clients by nature want security. Content availability has not kept pace with the changing consumers. Content generators have to generate enough to cater to individual tastes.&nbsp;</p>
<p style="text-align: justify;">
	Another perspective to the challenges is the industry - one where companies need to be more and more competitive in their marketing and product strategies. For this, they need to constantly innovate new products and therefore, reallocate an increasing amount of resources to research and development. Looking at the TV commercials in Nepal, one can easily see the lack of competition to generate adequate content Most of the commercials are that of FMGC (Fast Moving Consumer Goods). These markets are somewhat competitive and thus they focus on generating enough content to attract their consumers. However, for the products with uncompetitive market, the need to make the extra effort is not felt. This can result in the lack of contents in media. As more companies compete, the gestation period for newer products also decreases with each product life cycle. Companies should not only concentrate on selling units but also on creating a brand image.</p>
<p style="text-align: justify;">
	Finally, the lack of multi-skilled professionals in the newer arenas of business makes it difficult for the company’s old guard to let go of draconian or obsolete practices. This ultimately leads to turf wars over domain control. Convergence along with technological advancements has brought a tough competition in the media market. However, the level of seriousness is still very low. Acharya shares, “There is stiff competition &nbsp;to be the first to give the news to the audience but the accuracy and credibility of the news is lacking.” The skill demanded by Media Convergence is not being provided. He further says, “A computer literate media person is not good enough. We are using computers as typewriters and to get access to news only. Modern forms of technology should be better utilized. More creativity can be presented by using them which is not being done”. Nepali media is not fully aware about media creativeness. “Media are aware but not serious because they use online media for their convenience right now but they are not making long term assessments,” he says. In a period of 10 years, only the fittest will survive. His only request to media editors and directors is that they should stay updated with latest trends in media through training or orientations. &nbsp;</p>
<p style="text-align: justify;">
	<strong>Market and Technology Convergence</strong></p>
<p style="text-align: justify;">
	By plotting time against portability and interactivity and at the same time, selected parameters that might be called the benchmarks of technology progress namely moving image, computing, voice communication and games, we can get a historical perspective as well as deduce where the combined technologies are headed.&nbsp;</p>
<p style="text-align: justify;">
	However, in this case of mapping, the word convergence is never intended to suggest replacement (i.e. not everything is moving to one entity or point). All of the elements on the charts are still in existence and, except for VHS and DVD, will be around for a good while. We also see ‘divergence’ of media forms as it morphs across a sea of devices that continue to grow, layer upon layer.&nbsp;</p>
<p style="text-align: justify;">
	All technology makers and marketers would like to know what the next will be. In the portable domain will we always have separate phone and serious gaming device? We are already seeing the merging of the phone, organiser and media player (4GB phones are already in the market) – given you can dock these portable devices to the larger screen, carry all your content and that they can receive high definition TV, do we need fixed devices at all?&nbsp;</p>
<p style="text-align: justify;">
	<strong>Technology Convergence in Nepal</strong></p>
<p style="text-align: justify;">
	iPhone can be used in Nepal but it cannot be fully utilized. The phone clearly denies the user an access to its online stores by saying that the service is not supported in the region. This is due to the lack of an online payment system. On the contrary, Nokia phones are developing local contents for Nepal. Microsoft also provides Nepali language fonts for usage. However, the customers can use only the free services and not the priced contents. This can result in slow usage of technologies also. The telecom companies should be involved in this business. Both Ncell and NTC are providing mobile Internet service. This helps the users to use more social entertainment sites and random online contents but making full use of the latest technological innovations is difficult. Ncell has come out as the market leader with its gorgeous advertisements and user-friendly services. However, the customers want more.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Convergence of Understanding, Practicing and Innovating</strong></p>
<p style="text-align: justify;">
	Increasingly, one can observe a definitive trend in the convergence of understanding, practicing and innovating in the competitive marketplace where each participant is eying the largest chunk of the pie. Understanding the needs of the consumer has taken on a new importance with extreme segmentation and fragmentation in the marketplace. Identifying this need and creating a new product or service to fill this gap has gained prime importance, more so akin to a rasion d’être for the companies. From high value-high involvement products like home loans and automobiles to low value-low involvement products like detergent powders and toothpastes to soft drinks, companies are increasingly spending huge amounts of money to understand the patterns and motivations of the consumers for selecting, purchasing and using a certain brand.&nbsp;</p>
<p style="text-align: justify;">
	Even more important, the brand association that the consumers make with a certain brand can make or break the brand equity of a company’s product and the difference between success and failure of the product in the market. A constant drive to innovate and come out with better products is reflected in the ever-increasing amounts of R&amp;D spending of the companies. For example, high technology products like Nokia’s mobile handsets are made based on a constant feedback on usage and understanding of mobile phones by the customers. This has led to the incorporation of higher levels of innovation and user-friendliness in the next handset made by Nokia.</p>
<p style="text-align: justify;">
	A new concept on the horizon is co-creating value. This happens between the consumer and the manufacturer. The manufacturer actively seeks the cooperation of the consumer for creating new products.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Convergence of Creativity/Design with Technology and Business Sense&nbsp;</strong></p>
<p style="text-align: justify;">
	It wasn’t a long time ago when even the top copysmiths of advertising like Neil French used to write copy for ads and fit them in typesets for printing. Nowadays, even a copywriter in a small agency in a small town will type out the copy quickly on the computer and the graphic designer will fit it into the ad’s layout and send out the soft copy to the newspaper for printing. Technology innovation from typewriters to computers has made this shift possible. A school student with a typical Pentium desktop computer has, at his disposal, more computing power than NASA had when it sent the first man to the moon. The great enabler in this case, technology, is progressing with such rapid pace that the latest, most cutting-edge technology is rendered almost outdated within a few months of its release. Creative visualisers using advanced software like Adobe Photoshop and CorelDraw are daily creating breathtaking graphical masterpieces that would have taken even a Leonardo da Vinci months, if not years, to create.</p>
<p style="text-align: justify;">
	Convergence in technological standards like image formats (jpegs, gifs, etc.), audio-video formats (mpeg, avi, etc.), audio formats (mp3, wma, etc.), and so on, combined with interpolability and compatibility to use, share and transfer this data (USB, flash drives, DVDs and other optical storage) has created a powerful technology-design combo that professionals across the world are using in physical form as well as virtual form (cyberspace – Internet). Add to this, the keen entrepreneurial mind of a businessman and you have technology monoliths like the Times Group and others like AOL-Warner, Sony and Apple amongst many others who dominate the commercial landscape. Convergence is changing the way people live their lives on a daily basis.&nbsp;</p>
<div style="text-align: justify;">
	<div>
		<strong>Convergence of Classroom (Brick &amp; Mortar) with Internet (Click &amp; Portal) and Learning by Doing (Experiential): Experiential Brick and Portal&nbsp;</strong></div>
	<div>
		 </div>
	<div>
		<img alt="Midas EClass" height="86" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_midas_class.jpg" width="217" /></div>
	<div>
		Traditional classroom model has been in an evolutionary phase ever since technology innovations have made networking possible. Satellite communications like VSAT have enabled hundreds of thousands of students across the world to virtually attend lectures. The University Grants Commission (UGC) has empowered students in India because of this education and technology convergence. In professional courses, the emphasis has always been on practical knowledge rather than just theoretical inputs. The value addition to the professional skills development is far more when students are exposed to theories and their practical applications. Added to this is the new dimension of Internet learning. Numerous universities, colleges and institutes, especially in Western Europe and North America, are now offering degree courses through the Internet. This dissolves all cultural, geographical and social barriers for people who cannot afford the time and/or money to attend full time courses in foreign countries. The effective combination of these three models of learning- traditional classrooms, Internet and practical experiences, has become necessary for the students of today to become successful professionals of tomorrow.&nbsp;</div>
	<div>
		 </div>
	<div>
		Nepal is moving towards using technology for education, replacing the traditional “Chalk and Talk” method. Midas Education, a pioneer in the development of ICT (Information Communication Technology) in the education sector, encourages interactive teaching and learning. Students make use of PowerPoint presentations and other IT tools to enhance their skills and be prepared for the modern world. To bring a drastic change in the education sector, growth of ICT is very important. Information flow is unavoidable today due to the Internet and students are using GOOGLE for their education along with textbooks. The next challenge for Midas Education is to take ICT to the villages but as anyone can imagine, it is not an easy task. Use of ICT increases accuracy and quality of education and saves valuable time. Thus, ICT is necessary to modify the existent education pattern and to develop it.&nbsp;</div>
	<div>
		 </div>
	<div>
		Initially, it is difficult to use a new technology and learning it might take some time. But, as soon as we get used to it, there are only benefits to enjoy. Technology makes life comfortable and fast. The real beneficiaries of technology in Nepal are the students. Technology has been making their lives easier. They can easily grasp vague concepts. They do not need to mug up their course books these days; they have a chance to present their creativity. Along with the students, teachers are also benefiting.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in Media Consumption &amp; Media Buying</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		There was a time when you had simple choices to make – like choosing one newspaper from the three or four available, one radio station, one television station that broadcast only in the evenings, a couple of magazines from half a dozen available and so on. As the market kept segmenting and fragmenting, we now have thousands of radio stations to choose from with WorldSpace, Star TV itself telecasting more than half a dozen channels round the clock, there are more than a couple of dozen newspapers to choose from, hundreds of magazines to choose from and the story does not end there. With the advent of newer technologies, we now have newer channels of communications like mobile, Internet and direct-to-home television along with exponential storage capabilities on optical media like CDs and DVDs. Today, a typical consumer is bombarded with more than 1,000 messages per day. Marketers are finding newer ways and means to target the consumers.&nbsp;</div>
	<div>
		 </div>
	<div>
		One limitation for media consumption and media buying for Nepali consumers comes from the frequent load-shedding. This problem also makes an impact on the convergence cycle. The current trend is that the media houses are using all forms of media from print to radio to TV to online portals. One form of media is subsidizing the other. During the winter season, when the load-shedding is at its peak, advertisements in the TV decrease significantly to only 25 per cent as compared to the summer season. However, while the TVs are suffering from losses, the ads in the radio increase. Thus, radio subsidizes TV. Image Channel initially owned two TV stations: Image Channel and Image Metro. Now, it has replaced Image Metro with a new radio station, Image News, while the already existent Image FM still exists. This is an example of merging different types of media in one window, which is possible due to media convergence.&nbsp;</div>
	<div>
		 </div>
	<div>
		Another example of convergence in media consumption is the way in which consumers actively hunt for information. 3G mobile handsets are designed for high speed Internet connections and the user opts to use them in a variety of ways; like checking the online navigation to watch out for traffic jams, weather forecasts, locating the nearest fuel station, hospital or even a restaurant; everything is possible with the mobile handset. It also backs up as a personal information manager (PIM), a music player, a camera and a portable gaming device. Internet usage on the phone is aiding to media consumption but many people cannot afford it.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in Media Ownership</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		A massive diversification of media, thanks to the Internet, materialized by millions of websites, fora, blogs and wikis is taking place. That evolution, often labelled citizen journalism or citizen media, makes it possible for practically everybody to be a media creator, owner and actor, instead of a passive user.&nbsp;</div>
	<div>
		 </div>
	<div>
		With the technological advancements, convergence is expected to take various new forms. One form of media subsidizes the other and this poses a risk of developing a media tycoon. Currently, the Kantipur Media Group can give a run to the state media monopoly. It has an online news portal, a TV channel and radio broadcasting stations along with print media of daily and weekly newspapers, and monthly magazines. It is also considered the fastest and most reliable source of news. This has all been possible due to the proper utilization of technology.&nbsp;</div>
	<div>
		 </div>
	<div>
		Some of the largest media conglomerates in the world include American Media Inc., Bell Globemedia, Bertelsmann, Canwest Global, NBC Universal, Hearst Corporation, Lagardère Media, Liberty Media, News Corporation, Grupo PRISA, Rogers Communications, Sony, Time Warner, The Times Group (distinct from Times Newspapers of News Corportation), Viacom (owned by National Amusements), CBS Corp (also owned by National Amusements), and The Walt Disney Company.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in the Interests of Dual Markets&nbsp;</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		As more and more companies across industries look at multiple media platforms, especially the digital media, it is also emerging as a revenue-earning model for most of them. Also, e-commerce is growing rapidly and a host of companies are setting up online shops across portals.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Two sides of Media Convergence</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		With freedom, come the responsibilities. Media convergence has made a positive impact upon the advertisers. They only need to buy a small space in the websites and their ads get displayed 24 hours a day for as long as they want. The ads on the TV and newspapers last for a shorter period and are comparatively more expensive than the online ads. The design of the advertisements can also be changed from time to time. Also, the growing trend of media houses trying to use all forms of broadcasting media and print media makes it possible for the advertisers to negotiate rates. Their marketing is now more cost effective than before. They can easily use different tools of media and show their advertisements to their consumers through websites, TV, radio, as well as newspapers.</div>
	<div>
		 </div>
	<div>
		The Interim Constitution provides publication and broadcasting freedom to media but again imposes certain restrictions that allow the media to enjoy only the relative freedom. The online media however does not follow these rules and regulations. Online media has no monitoring system and in today’s world, the flow of information is difficult to stop. Hence, news that can be harmful should be stopped from spreading.&nbsp;</div>
	<div>
		 </div>
	<div>
		The definition of media is not the same as it was a decade ago. Facebook is an example of this. This new social media has influenced us largely. Now, every citizen is a reporter as he or she can constantly update news through Facebook. The news about Paras Shah getting a heart attack was published in the Facebook before any other media houses could print or broadcast it. Technology is responsible for this. While 10 years ago, technology turned the world into a global village, today it has changed the world into a global family. If a person in Nepal gets married today and updates his photos on Facebook, his friend in the US can see the photos. This ignores the geographical boundaries and aids in sharing cultures between people of different nations. Thus, it has been making a positive impact worldwide.&nbsp;</div>
	<div>
		 </div>
	<div>
		When the Royal Palace Massacre took place in 2001, &nbsp;a rumour was spread saying that somebody had mixed a poison in the water coming from the Water Supply Tank in Sundarijal. That was a time when people had no other forms of communication except for the landline phones at their homes. If that was enough to discourage many people from drinking water inside Kathmandu valley, we must think how effective can such rumours be today. We have all the powerful tools of communication from mobile phones to the Internet and it will take only seconds for such rumours to spread. &nbsp;Hence, with media convergence, self-regulation is required. People are required to be more responsible. Ill-intended propaganda and rumours should not be published.</div>
	<div>
		 </div>
	<div>
		<strong>Future Impacts</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		It is certain that over the next five years, technology will not remain the same. Newer versions will be available that will bring about more revolutionary changes. Hence, impact is a vague word in future terms. With changes in technology, the working processes will change which will provide the necessary opportunities towards beneficial transformations. The use of the latest technology produces beneficial products but education regarding technology is a limiting factor for a country like ours. With around 50 per cent of the graduating population having some form of knowledge regarding Information Technology (IT), it is not an impossible challenge. However, the business owners and leaders have the responsibility of encouraging this population for increased use of IT. &nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Media Education: Need for a Paradigm Shift</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		<img align="left" alt="Media Education" height="139" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_media_education.jpg" style="margin:0 10px 0 0;" width="200" />The world today is in the midst of one of the most dramatic technological revolutions in history. It is effecting changes in everything ranging from the ways we work, communicate commerce and spend our leisure time. The technological revolution which is underway centers on computer, information, communication, and multimedia technologies and may be seen to be the beginnings of a knowledge or information society. In such a society, education has a central role in every aspect of life. The proliferation of communication-information technologies poses tremendous challenges. It compels educators to rethink their basic tenets and to deploy the media in creative and productive ways. It forces them to restructure ways of learning-teaching to respond constructively and progressively to the technological and social changes that we are now experiencing.&nbsp;</div>
	<div>
		 </div>
	<div>
		Midas Education has been contributing to the development of ICT for education for about 12 years now. This continuous growth of Midas comes from continuous positive responses and moral support they got from their customers. Just like the processors developed in recent years from Pentium IV to i7, adding more layers in their newer versions, Midas has also been adding layers in their work to promote the use of ICT in the education sector. &nbsp;Raju Baniya, Business Manager of Midas Education, says, “This has improved our results year on year. We started with making self learning CDs and now we are trying to transform the class rooms.</div>
	<div>
		 </div>
	<div>
		As a consequence of information super highway and communication technologies, media and communication education have undergone almost unbelievable changes. The old lines between disciplines are becoming obsolete. The work of professional communicators is undergoing a dramatic change. Resultantly, there are likely to be very few belonging to one discipline which might be conversant with all forms of media in the days to come. With such metamorphosis of the professions underway, it is a real challenge to prepare students for successful professional careers in the era of convergence and connectivity of the variety of media.&nbsp;</div>
	<div>
		 </div>
	<div>
		In an era characterized by convergence of technologies the need for skilled media professionals who understand the foundation, both ethical and practical, from which they need to work, becomes even more critical. But without adequate training in new media skills, the goal will remain unachievable. This crisis in media requires to be addressed in the class room where young professionals are molded and sculpted. But to meet the needs of the fast growing media industry, an ongoing training is vital to ensure that those working in the field have to grow and develop. This entails broadening, updating and upgrading the core component of the media education at various levels.&nbsp;</div>
	<div>
		 </div>
	<div>
		What media students today need is nothing short of a leading-edge education suited to the needs of networked globalised industry. This would involve greater accent on fundamental concepts, values and skills needed to prepare them for communication careers commensurate with unprecedented changes. They need be fully equipped to understand the whole of communication scenario, be able to solve problems and imbibe the ethical and legal implication of media and communication which will let them be comfortable with innovation and working in concert with their peers. The object of the new media education is to prepare students for leadership roles in their professions and in their communities.&nbsp;</div>
	<div>
		 </div>
	<div>
		With a view to achieving the object of quality media education, the institute of Mass Communications are in dire need of reconfiguring and updating their curriculum to produce graduates who are prepared for future leadership roles in the media and communication industries and who are able to communicate across disciplines and in multiple media formats. This for providing students with strong core content in critical thinking, research and analysis, information gathering, writing, graphics and design, and law and ethics and the latest media technology and skills. It is not always possible for teachers to take students to lab to conduct required educational activities. Similarly, the task of taking students for field visit for practical knowledge is also not possible every time. In this context, the MiDas eCLASS offers audio-visual contents that complement the lab activities and field visit to enable the students to gain real-life experience.&nbsp;</div>
	<div>
		 </div>
	<div>
		The media education departments must offer to their students fully computerized reporting and editing classes, and create totally digital classroom and laboratory systems. They must orient themselves to revise their journalism curriculum and always be ready to undergo continual adjustments in response to changes in the profession. Far from print and broadcast sequences running separate, as is the case today, students in the two sequences need to plan news coverage together and work together in the labs. Tomorrow, it is quite likely that the sequences might disappear and students will be required to work seamlessly on stories for print, electronic media and the Internet – or whatever systems will exist in the future.&nbsp;</div>
	<div>
		Same is the case for students of marketing communications who need to integrate the different tools of branding and marketing: advertising, public relations, event management, digital marketing, direct marketing, etc, before specializing in one functional area.</div>
	<div>
		 </div>
	<div>
		For entertainment media students, it is significant to integrate skills for the entire entertainment industry: from television to cinema, from radio to digital entertainment, from events to musicals, etc.</div>
	<div>
		 </div>
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			'title' => 'Insuring Nepal’s Aviation Risks',
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			'content' => '<p>
	<strong>By Sushila Budhathoki</strong></p>
<p>
	<img alt="Cover Story February 2013" height="329" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013.jpg" width="550" /></p>
<p style="text-align: justify;">
	<span style="text-align: justify;">“The higher the risk, the higher the potential return,” goes a popular saying. The economic logic is however that the profit is higher when risks are minimized. And there comes the insurance business to help the other businesses to reduce risks. In the process, both insurance companies and their business clients become happy. But this does not seem to be the case in aviation portfolio of Nepali insurance companies. &nbsp;Although aviation insurance is a high profile business in Nepal, it happens to be one of the weakest portfolios for most insurance companies in terms of profit. The aviation insurance business looks good in terms of premium collection but there is hardly any profit.&nbsp;</span></p>
<p style="text-align: justify;">
	The reason is: the insurance companies providing aviation insurance have to pay a high amount of premium – more than 99 per cent at times - to the reinsurance companies abroad. In fact, the companies are sustaining their aviation insurance business from the commission they get for the premiums paid to the foreign reinsurers. Mahendra Shrestha, Managing Director of Himalayan General Insurance, says, “Whether it’s profit or loss, it goes to the reinsurance companies. We (local insurance companies) are just the intermediaries. And if we fail to reinsure, we cannot sustain the operation. So, we have to depend on reinsurance companies abroad. There is no other choice.”According to Shrestha, some insurance companies are paying up to 99.97 per cent of the premiums collected to the reinsurance companies. “It has been a non-profit business for even most of the reinsurers who have only two choices - walk away or keep doing business at high premium rates to recover previous losses,” he adds.&nbsp;</p>
<p style="text-align: justify;">
	A three-year data (From 2009/10- 2011/12) of Beema Samiti, too, depicts the pathetic condition of Nepali insurance companies in aviation portfolio. During this period, only a few companies could make some profits which however, is paltry (See table 1). Rameshwor Thapa, President of Airlines Operators Association of Nepal (AOAN), says, “Since this is a highly regulated and risky business, there can be loss or profit and the clients also contribute in both these factors.” There are altogether 25 insurance companies including 17 non-life insurance companies in Nepal. Among the non-life insurance companies, seven &nbsp;deal in aviation insurance (See table 2). Nepal insurance Company Ltd and Neco Insurance which were doing aviation insurance previously have pulled their hands from aviation portfolio now.</p>
<p style="text-align: justify;">
	Lack of domestic reinsurance companies and low retention capacity of Nepali insurance companies has resulted in huge amount going abroad as remittance premium. The Nepali airlines are paying around USD 8-9 million premiums to the insurers yearly. The Nepali insurance companies retain 0.5 per cent of this and send the rest to the reinsurance companies.&nbsp;</p>
<p style="text-align: justify;">
	Dip Prakash Panday, CEO of Shikhar Insurance, says, “The way our aviation business has been exposed, we cannot afford the risks. Who will bear the risk if some big loss occurs?” Panday asks, adding, “We are not sending money, we are transferring the risk. The &nbsp;companies are still in profit because the money is flowing in from the reinsurers abroad as commissions. Since they agreed to take the risk, they bear the loss as well, when it happens.” Shikhar Insurance, &nbsp;one of the major players of Nepal’s aviation insurance business earned Rs 10.5 million as reinsurance commissions last year.&nbsp;</p>
<div style="padding:10px; background:#f4f3e6;">
	<strong>Nepal’s First Aviation Insurance Summit&nbsp;</strong></div>
<div style="padding: 10px; background-color: rgb(244, 243, 230); text-align: justify; background-position: initial initial; background-repeat: initial initial;">
	<img align="left" alt="Aviation Insurance Summit" height="173" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(2).jpg" style="margin:0 10px 0 0;" width="300" />Held In January, an ‘Aviation Insurance Summit’ was held in Kathmandu where all the stakeholders including the reinsurance companies participated. The summit brought about a fresh wave of optimism in Nepal’s aviation insurance sector. Mahendra Shrestha, MD of Himalayan Insurance, who was also in the organizing committee says, “The Summit brought local stakeholders, including operators, regulatory bodies, insurance companies and banks as well as key players in the regional and global aviation insurance industry including underwriters and reinsurance brokers under one roof. It gave the Nepali stakeholders a global perspective on our current situation as well as access to the expertise of visiting delegates.” He further adds, “After the summit, all the delegates expressed that they found it to be a helpful introduction to the Nepal aviation insurance market and that it helped them take better decisions about supporting it.”</div>
<p style="text-align: justify;">
	 </p>
<p style="text-align: justify;">
	Airlines insure their fleet according to the value of the aircraft. The reinsurers charge different premiums depending on the type of aircraft, experience of the pilots and engineers, infrastructure, equipment, management facilities and age and the value of the aircraft. Aviation insurance coverage is categorized into the following types: Hull, War, Allied, Perils Insurance, Third Party Liability Insurance, In-flight insurance, Passenger liability insurance etc. The passengers are insured at USD 20,000 each and crew member at USD 40,000 each while the coverage of other categories like hull, war etc varies from airline to airline. According to the operators, the reinsurance market in Nepal was dependent on the India for a long time since it started in the early 1960s. In recent times however, as both the risk and the premium witnessed a constant upsurge, the market shifted to Europe. Indian Insurance companies like GIC, ICICI Lombard, United India and IFFCO-TOKIO were the main reinsurance partners of insurance companies previously, but the number of Indian reinsurers who do reinsurance business in Nepal has decreased over the past few years. &nbsp;</p>
<p style="text-align: justify;">
	<strong>High Premium</strong></p>
<p style="text-align: justify;">
	After the 9/11 terrorist attack in the US in 2001, where two planes - American Airlines Flight 11 and United Airlines Flight 175 - were crashed into the North and South Trade Towers, the aviation sector saw a sudden rise in premiums globally. After the incident, most of the reinsurers increased their premium rates worldwide while others loaded the premium according to the risk factors. Nepali airliners are charged up to 12 per cent premium now while airliners generally pay 4-6 per cent internationally. Previously, the premium rate for Nepal was up to 7 per cent. Thapa says, “We used to pay USD 30,000 as &nbsp;premium as early as six years ago. Now we have to pay USD 300,000 for the same aircraft – 10 times more than the premium rates in the past.” Currently, Tara Air and Agni Air are paying up to 12 per cent premium. However, Panday says that the premium rates differ from airline to airline. He says, “It is not that all airlines have to pay a high premium. The premiums of some airliners are as low as 1.5 per cent.”&nbsp;</p>
<p style="text-align: justify;">
	There are many conditions when the reinsurers charge high premium. They charge more if they discover that the airliners have had an air accident in the last five years or have a high frequency of making claims. Prem Bahadur Maharjan, Chaiman of Rastriya Beema Sansthan (RBS), says, “The risk factor is not within our control and that needs to be reinsured with other international insurance companies outside the country.” Decrease in the number of airlines due to the crashes and age of the aircraft lead to also high premiums. Prof Dr Fatta Bahadur KC, Chairman of Beema Samiti, says, “We had had the normal rates. But when one reinsurer increases the premium rate, others follow suit. Now the weakest airliners have to pay dearly while others too are paying high charges.”&nbsp;</p>
<p style="text-align: justify;">
	As Nepali aviation insurance is serviced by the international reinsurance market, rising premium rates is affecting the sustainability of the business. As the risk increases the market becomes limited and the airliners have no choice but to accept the high premium rates. Kewal Krishna Shrestha, CEO of Everest Insurance says, “The aviation business is running though the reinsurers are charging up to 12 per cent. But what if they charge 20-25 per cent? I don’t think the aviation industry in Nepal could bear such high premiums.” He says the environment in future could be such that even the high premium might not draw the reinsurers into confidence because of the high risk involved in the Nepali aviation and that the reinsurers could add more clauses which could affect the overall aviation business in Nepal.&nbsp;</p>
<p style="text-align: justify;">
	The reinsurers, however, insist that the premium is always determined by the risks anywhere in the world. According to Dr Pronab Sen, CEO of Nepal operation of National Insurance Company, the government-owned insurance company of India, the premium is based on the past losses. He says, “If you see the statistics, almost every year there is a crash and sometimes, there are 2 crashes in Nepal. And the rate of premium is governed by the reinsurance market. Because of the air accidents, some of the reinsurers were hesitant to do business in Nepal.” Sen adds, “We have our own retention limit. Depending on our financial strength, we retain a very small portion of the risk and reinsure the rest with other reinsurance companies. This is a worldwide practice in the insurance business. It depends on portfolio and risks. Sometime we retain 20 to 80 per cent- sometimes 90- depending on the risks.” Doug Horne, Marketing and Business Development Manager at Airclaims- A UK-based leading reinsurance company, shares a similar experience. He says, “The present level of risk is too high but there are enough insurers willing to support the market, albeit currently at a higher cost than in some other places.”&nbsp;</p>
<div>
	<img alt="Aviation Insurance Business" height="298" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(3).jpg" width="550" /></div>
<div>
	<div>
		<strong>The Risky Rural</strong></div>
	<div>
		 </div>
	<div style="text-align: justify;">
		The airlines which fly mostly in the hilly region are among the high premium paying ones. On the trunk routes, the premium is only around 3-4 per cent and in the case of STOL (Short Take Off and Landing) runways, the premium rate varies from a minimum 3 to a maximum 12 per cent. Due to the risk in rural areas, the reinsurers load more premiums on them. According to the operators, the aviation insurance started becoming a loss-making business for reinsurers since 2009. There have been eight aviation crashes, killing 114 people in the past six years. Almost all these accidents took place in the hilly region. Of them, six deadly accidents occurred in 2011 and 2012 alone, excluding four helicopter crashes of which a couple were fatal. Being a mountainous country, the weather, terrain and the high altitude in the hilly region are the major challenges for the aviation sector. Poorly managed and small airfields, unpaved runways and lack of manpower to co-ordinate pilots in these areas are considered the reasons behind the air crashes. An aviation expert, requesting anonymity, says, “We need pilots who are well trained and have a sound understanding of weather pattern, especially clouds.”&nbsp;</div>
	<div style="text-align: justify;">
		The emergence of private airliners in domestic air transport started in 1992 when Nepal adopted a liberal aviation policy. And in 2002, expansion of the International Terminal Building at Tribhuwan International Airport (TIA) and the construction of a new Air Cargo Complex made it convenient for the international airliners to operate in Nepal. This increased the flow of international tourists in Nepal. Increased tourist arrivals, in turn, have led to a growth in the aviation business and aviation insurance business too. This is why the aviation insurance business has grown over &nbsp;the past decade. There are 10 fixed-wing airplane operators and five helicopter operators in Nepal at present. The Civil Aviation Report 2011-2012 also depicts a steady growth in the aviation sector with increasing flight movement.&nbsp;</div>
	<div style="text-align: justify;">
		There are altogether 54 airports in Nepal. Among them, 34 are operational at present. Among the running airports, eight are on the trunk routes- while the rest are in the remote areas. Thapa says, “Trunk route operators have fewer problems in comparison to the STOL route operators mainly because of the high hills and high altitude. There have been many instances of chopper accidents on the STOL routes.” Airports in Pokhara, Biratnagar, Janakpur, Nepalgunj, Bhairahawa, Kathamandu, Dhangadi and Chandragadhi are on the trunk route. The domestic aircraft which fly in trunk route have a minimum seat capacity of 15 and a maximum of 72 while the planes in STOL routes have minimum seat capacity of 9. &nbsp;Big aircraft fly on the trunk routes while the small ones &nbsp;are considered best for the hilly region. Suresh Acharya, Joint Secretary at Ministry of Tourism and Civil Aviation (MOTCA) says, “There is a high risk on the STOL route especially for twin-otters. There is an urgency to enhance the capacity of the pilots who fly on the STOL routes. ”</div>
</div>
<div>
	<div style="text-align: justify;">
		 </div>
	<div style="text-align: justify;">
		<strong>The aviation insurance cover</strong></div>
	<ul>
		<li style="text-align: justify;">
			Hull All Risk (Loss or Damage to the Aircraft)</li>
		<li style="text-align: justify;">
			Hull War</li>
		<li style="text-align: justify;">
			Passenger and Cargo Legal Liability</li>
		<li style="text-align: justify;">
			Crew Personal Accident</li>
		<li style="text-align: justify;">
			Pilots Loss of License</li>
		<li style="text-align: justify;">
			Third Party Liability</li>
	</ul>
	<div>
		<div style="text-align: justify;">
			<strong>Bad Image</strong></div>
		<div style="text-align: justify;">
			 </div>
		<div style="text-align: justify;">
			The frequency of accidents has created fear in the reinsurers’ minds, pushing Nepal into a ‘risk zone’. These accidents could have negative impact on the country’s tourism if the casualties included many foreigners. Nepali aviation sector had gone through similar hard times in the past too. Ten years ago when Maoist combatants set ablaze Fishtail Air’s helicopter in western Nepal, domestic airliners got notification from the reinsurance companies abroad that they won’t compensate the losses in case of any terrorist attack. &nbsp;Panday says, “Fear is a very dangerous thing. Our terrains are difficult, which has sent a wrong perception. Similarly, loss is also a perception and can be changed. All we need is 3 to 4 years of good loss ratio.”</div>
		<div style="text-align: justify;">
			The domestic airlines are often accused of poor maintenance of their airplanes and the pilots of not following the standard operation procedures. Similarly, it is said that there is often a lack of co-ordination between the&nbsp;captain and co-pilots. Acharya says, “According to our findings, human factor is responsible for 80- 85 per cent accidents. The remaining 15 per cent accidents are caused by failure of machine, bad weather etc. It seems that the pilots are not very efficient at taking the right decision in time of emergency or they do not make the maximum use of the cock-pit. Lack of co-ordination between pilots and co-pilots and no guidance from the ground people when the plane is flying is common.”</div>
	</div>
</div>
<div style="text-align: justify;">
	<img alt="Income and Expences" height="216" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(4).jpg" width="579" /></div>
<div style="text-align: justify;">
	 </div>
<div style="text-align: justify;">
	<div style="">
		Lack of consultation between the government and insurance authorities for resolving the key issues of the aviation sector has made the aviation business worse. Acharya says, “The government is unaware about the kind of image the reinsurance companies are making of Nepal. They should have believed the government’s aviation report.” He further adds, “We need to develop that kind of mechanism. We are ready to help whenever they need any support from the government. All we need to do is build that kind of mechanism where the government as well as the insurance companies could sort out the problems together.”&nbsp;</div>
	<div style="">
		The use of ‘old’ aircraft by some domestic airlines has only added to create a negative image of the Nepali aviation, though people in the industry and experts do not call it a problem. According to a Nepali scholar who has a Master’s degree in Aeronautical Engineering from Poland, not following the standard operation procedures by the aviation operators is the major drawback in Nepal’s aviation. He says, “It does not matter whether the plane is old or new; what matters is its scheduled as well as need-based maintenance.” Lack of distance measuring equipment (DME) at airports is another shortcoming for the country’s aviation sector. He adds, “Towers are more helpful in tracking the aircraft in the right way. However, most of our airports rely on windsocks &nbsp;to indicate wind direction and the relative wind speed. This is risky. Sometimes, there is no one in &nbsp;the towers at the airports to coordinate with the flying pilots.”&nbsp;</div>
	<div style="">
		An aircraft is generally considered safe until the deadline given by its manufacturer. There is a manual for every air plane and manual for flying hours including number of flights a day. The Beema Samiti issues, renews, dismisses the licenses of insurance companies, insurance surveyors and insurance agents. It has also been “working for the development, management and regulation of the insurance business in the country.” The BS 2067 Report of Beema Samiti has also recognized scarcity of skilled manpower, unhealthy competition among insurance companies and lack of reinsurance companies within the country as the major problems of the aviation insurance business. However, the Beema Samiti has not been able to address these problems properly. Maharjan says, “There has to be a strict monitoring mechanism for air traffic discipline and safety education to the people involved in the aviation business. Pilots should also be alerted against taking any sort of risks. Aviation safety is not related to money only; it’s about lives of people.”</div>
	<div>
		 </div>
</div>
<div style="padding:10px; background:#f4f3e6;">
	<strong>Utilizing Civil Aviation Academy&nbsp;</strong></div>
<div style="padding: 10px; background-color: rgb(244, 243, 230); text-align: justify; background-position: initial initial; background-repeat: initial initial;">
	If given due importance, the Civil Aviation Academy (CAA), the only training center for aviation related training in Nepal, could be beneficial to the whole aviation industry. CAA conducts basic, refresher, induction and recurrent trainings related to Air Traffic Control, Aviation Security, Fire fighting and rescue, CNS and others based on quality curriculum. Though it is the only state’s approved aviation training organization (ATO) in Nepal, the private sectors have failed to utilize them properly. Mahendra S. Rawal, Chief of CAA says, “Though we are also in the developing phase, we can still work together to develop expertise. Together we can either develop the infrastructure here or bring expertise from outside the country.” The CAA runs courses on Air Traffic Services (ATS), Engineering, Aviation Security, Aerodrome rescue and fire fighting among other five dozen courses ranging from knowledge based to competency based training.</div>
<p>
	 </p>
<p>
	<strong>The Way Forward</strong></p>
<p style="text-align: justify;">
	Mergers among insurance companies to increase capital base is regarded as one of the possibilities for enabling the insurance companies financially. The insurance companies are also trying to increase their retention capacity from 0.5 to 1 per cent which has spread positive message to their clients. There have been many progresses in Nepal’s aviation sector. From the month of Kartik, this year; Tourism Ministry has revised the provision of compulsory payment of 60 million dollar in third party liability to airliners during the registration time. CAAN has subsidized up to 8 million dollar to the airlines that fly to rural areas. An agreement was signed between the Government and CAAN for Capacity Enhancement Project of TIA under ADB loan in 2010. A safety audit was carried out in Nepal from 5 to 14 May 2009 according to the Universal Safety Oversight Audit Program (USOAP) as provisioned by ICAO and the Corrective Action Plan based on the flight safety. The findings of the audit have already been submitted to ICAO. Furthermore, a provision has been made to perform all activities in congruence with the concept of ICAO USOAP Audit Continuous Monitoring Approach (CMA).&nbsp;</p>
<p style="text-align: justify;">
	Tri Ratna Manandhar, Director General, CAAN says,” We have followed international standards in safety measures and the maintenance of aircraft is carried out as per the European standards- EASA Part-145. Buddha and Yeti airlines have already started it and others are in the process.” According to him an ICAO team is visiting Nepal in July 2013 for audit. He says, “After this ICAO audit, we will be able to prove that we have made progress in aviation management including the safety.” CAAN has been conducting strict safety programmes for safety and maintenance for the past six months. Likewise, the board of CAAN approved Air Operator’s Requirement (AOCR) in November 2012 which clearly mentions the requirements to get Air Operator Certificate. It has also managed the maintenance of aircrafts by AMT (Aircraft maintenance technician) from UK from this year. It is also planning to build an isolated parking for the planes having bomb threats and hijacking etc next year.&nbsp;</p>
<p style="text-align: justify;">
	No compromise &nbsp;at all with safety could be the best way to lower the high premium in Nepal’s aviation insurance, say the experts. The airline operators, too, are more aware about maintaining the safety standards today than in the past. AOAN has been organizing many seminars on aviation and programmes to help lower the premium by assuring safety. Thapa says, “There have been programmes organized aimed at enhancing the safety measures and we are very much confident that we would be able to enhance the safety measures.” He adds that airline operators are optimistic about reducing the risks. “A plane using only the Visual Flight Regulation (VFR) should not be allowed to go through the clouds. Pilots too should stop flying in pressure. If we follow all the safety measures definitely the risks have to go down. Civil Aviation Authority of Nepal (CAAN) should monitor these flights and instruct the airlines accordingly,” He says.&nbsp;</p>
<p style="text-align: justify;">
	Experts also feel the need of &nbsp;terrain awareness and warning systems (TAWS) developed by manufacturers and safety regulators to prevent accidents from Controlled Flight into Terrain (CFIT). CFIT is among the leading causes of airplane accidents involving the loss of life worldwide. The Wikipedia describes it as an accident in which an airworthy (fit to fly) aircraft, under pilot control, is unintentionally flown into the ground, a mountain, water, or an obstacle. With improvements in infrastructure, training and operations, reinsurers are also optimistic in reducing the cost of insurance to a reasonable level. Horne from Airclams says, “The prospects for aviation insurance business in Nepal are bright. There is a capable and knowledgeable local market which has good relationships with the global insurance community.” He adds, “What is perceived as the current high cost of insurance can and should be reduced for operators who demonstrate a good safety culture and record, adopt a Safety Management Programme that is working well and can prove that it is making a difference.”</p>
<p style="text-align: justify;">
	While the formation of a pool of all the insurance companies to collectively handle the claims in aviation insurance is in the initial phase, the government is planning to convert the insurance pool into a reinsurance company under Beema Samiti. &nbsp;Ramesh Lamsal, Executive Director of Insurance Pool says, “We have not prepared the business plan about aviation insurance yet. But if the aviation segment is included it will support the aviation business in Nepal.” Government authorities say that if the main players in the aviation business in Nepal- the airliners and insurance companies prepare appropriate strategy for the safety measures they are ready to co-operate insurance companies and protect them from those risks. Dr. KC says, “There should be positive attitude towards the formation of possible reinsurance company in Nepal after calculating the advantages and disadvantages on the business. The foremost thing is that it should be for the stability of the aviation business.”</p>',
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			'description' => 'The insurance companies providing aviation insurance have to pay a high amount of premium – more than 99 per cent at times - to the reinsurance companies abroad. In fact, the companies are sustaining their aviation insurance business from the commission they get for the premiums paid to the foreign reinsurers.',
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			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘Nepali insurance companies are paying big premium to re-insurance companies’</strong></p>
<p>
	<img align="right" alt="Fatta Bahadur KC, Chairman Beema Samiti" height="329" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/fatta_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></p>
<address style="text-align: right;">
	<strong>Prof Dr Fatta Bahadur KC</strong></address>
<address style="text-align: right;">
	<strong>Chairman</strong></address>
<address style="text-align: right;">
	<strong>Beema Samiti (The Nepali regulator of Insurance Sector)</strong></address>
<p>
	 </p>
<p>
	 </p>
<p style="text-align: justify;">
	<strong>What is the size of the aviation insurance market in Nepal?</strong></p>
<p style="text-align: justify;">
	Aviation insurance is one of the important portfolios in the insurance sector. So far as the size of the aviation insurance is concerned, it has been increasing every year. There are altogether 17 non-life insurance companies registered. But only seven of them are into the aviation insurance business. The annual premium collection from aviation insurance in Nepal is about Rs 3 billion.&nbsp;</p>
<p style="text-align: justify;">
	<strong>It is said that some insurance companies are trying to form a pool to handle the aviation insurance claims collectively. What is the latest progress in this regard?</strong></p>
<p style="text-align: justify;">
	I, too, have heard that some insurance companies are trying to tie &nbsp;up to form such a pool. But this is yet to get a concrete shape, as far as I know. I think the main objective behind forming such a pool is to reduce insurance risks in the aviation sector. We hope the pool will come into operation in the near future.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What future do you see for the aviation insurance business in Nepal?</strong></p>
<p style="text-align: justify;">
	The future of aviation insurance business is bright. As the government has already adopted a liberal economic policy, many new airliners have entered Nepal. Aviation insurance as a business has grown in Nepal with the growth in the domestic aviation sector. &nbsp;Air travel has become convenient and affordable for many Nepalis today. This has ultimately helped the aviation insurance business grow in the country.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Almost whatever the insurance companies earn from the aviation segment goes to the reinsurance companies abroad. Some are even said to be making losses in the aviation segment. It is said that the companies know that they are not going to make profits from the aviation segment. But they do aviation insurance just to show high amount of premium collections. What do you say?</strong></p>
<p style="text-align: justify;">
	It is obvious. Though, insurance companies should have retention capacities to bear the risks by themselves, most of them lack this. This is one of the reasons why they transfer their risks to the re-insurance companies. Consequently, Nepali insurance companies have to pay a high volume of premium to them. The margin between the premium collected from the airlines companies and the premium paid to the re-insurers is very small. It shows that they are not able to save even the cost to transfer their risks. They need to transfer funds to reinsurance companies. It is a very serious problem.&nbsp;</p>
<p style="text-align: justify;">
	<strong>How can we lower the high insurance premium?</strong></p>
<p style="text-align: justify;">
	First of all, the airlines should try to be safe from different risks. Other stakeholders like CAAN should also maintain the runways properly and other technical aspects, information dissemination practices etc. The pilots, too, should be well-trained. All other stakeholders in the aviation sector should take this matter seriously, work on it together and make careful collective efforts to avoid risks.</p>
<p style="text-align: justify;">
	<strong>Aviation insurance premium in Nepal is said to be among the highest in the world? Why is it so high?</strong></p>
<p style="text-align: justify;">
	Yes it is true. Since the premium is always determined by risks; a high risk ultimately draws a higher premium. This risk is mainly associated with aircraft accidents; the more the accident, the more the risks. We have been trying to reduce the risks in this sector which is known as mitigation of the risks.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The annual claims payout in the aviation sector has been constantly rising. Some people say this could further increase the already significantly high aviation insurance premium. How are we going to address this problem?</strong></p>
<p style="text-align: justify;">
	It is a compulsion for the aviation insurance business in Nepal. Generally, if the premium is high, the practice of insurance is low but in aviation insurance, if the premium is high you need to reinsure with other big companies because of the risk factor. You need to find reliable reinsurers, pay premium and transfer your risks to them. There is a direct and positive relation between the increasing rate of premium and the business of aviation insurance. However, if all these measures are properly adopted then the premium rate will be low.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There are various types of aviation insurance policies in the world. Are all of them available in Nepal?</strong></p>
<p style="text-align: justify;">
	We have only few aviation policies which basically cover the aircraft, crew-members and passengers. It also covers the sky, and if both the parties agree, grounded risks are also included in the aviation insurance. Generally, an insurance policy depends on the requirement of the policy holder. Therefore, the requirements of the airliners play a key role in the agreement between the insurance companies and the airliners.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. How helpful was this summit?</strong></p>
<p style="text-align: justify;">
	The summit was a milestone in Nepal’s aviation sector. It’s &nbsp;definitely a positive development. It helped the stakeholders in the aviation business to know each other and, at the same time, provided a platform to share their experiences, views and problems. I think the re-insurers, the under-writers and other stakeholders who participated in the programme knew the actual situation of Nepal and the aviation insurance business here. The summit was successful and the Nepali stakeholders have succeeded in addressing some of the key issue of the aviation insurance business in Nepal.</p>',
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			'description' => 'The margin between the premium collected from the airlines companies and the premium paid to the re-insurers is very small. It shows that they are not able to save even the cost to transfer their risks.',
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			'id' => '872',
			'article_category_id' => '40',
			'title' => 'The Pooling Mechanism Is To Stabilize The Insurance Market',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘The pooling mechanism is to stabilize the insurance market’</strong></p>
<p>
	<strong><img align="right" alt="Mahendra Shrestha, Himalayan General Insurance" height="301" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/mahendra_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></strong></p>
<address style="text-align: right;">
	<strong>Mahendra Shrestha</strong></address>
<address style="text-align: right;">
	<strong>Managing Director</strong></address>
<address style="text-align: right;">
	<strong>Himalayan General Insurance</strong></address>
<p style="text-align: justify;">
	 </p>
<p style="text-align: justify;">
	<strong>What is your company’s stake in the aviation insurance market?</strong></p>
<p style="text-align: justify;">
	Himalayan General has been writing aviation insurance since 1998 and it is a portfolio we continue to be interested in.</p>
<p style="text-align: justify;">
	<strong>It is said that some insurance companies are trying to form a pool to collectively handle the aviation insurance claims. What is the latest progress in this regard?</strong></p>
<p style="text-align: justify;">
	Preliminary discussions have been initiated for the formation of aviation insurance pool. The formation of such a pool will not only allow insurance companies to gain capacity but also make it viable for the re-insurers to continue supporting Nepal’s aviation insurance market.</p>
<p style="text-align: justify;">
	<strong>What future do you see for the aviation insurance business in Nepal?</strong></p>
<p style="text-align: justify;">
	It is a portfolio which is an absolute necessity in Nepal and one that will continue to grow.</p>
<p style="text-align: justify;">
	<strong>Aviation insurance premium in Nepal is said to be one among the highest in the world? Why is it so high? How can we lower it?</strong></p>
<p style="text-align: justify;">
	Aviation insurance premium in Nepal is certainly very high. Some big losses in the last few years have pushed up the premium rates substantially. The continually rising premium rates are, of course, a serious concern because they impact the sustainability of the business. The pooling mechanism is one of the possibilities we are exploring in order to stabilize the market. Eventually, if the total premium paid is more than the total amount claimed in losses, we hope the premium will start to come down.</p>
<p style="text-align: justify;">
	What are the key challenges and issues facing the aviation insurance industry in Nepal and what needs to be done to address these challenges?</p>
<p style="text-align: justify;">
	Rising premium rates and shrinking market capacity are two major challenges the aviation insurance industry is currently facing. The Aviation Insurance Summit was one way to address these challenges and find a common direction for improvement and growth.</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. How helpful was this summit?</strong></p>
<p style="text-align: justify;">
	The Summit brought local stakeholders, including operators, regulatory bodies, insurance companies and banks as well as key players in the regional and global aviation insurance industry (including underwriters and re-insurance brokers) under one roof. It gave the Nepali stakeholders a global perspective on our current situation as well as access to the expertise of visiting delegates, all of whom have extensive experience in this sector, including in other countries with contexts similar to Nepal.</p>
<p style="text-align: justify;">
	All the delegates who attended the Summit said that they had found it to be a helpful introduction to the Nepal aviation insurance market, adding that it will help them take better decisions for supporting it.</p>',
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			'id' => '871',
			'article_category_id' => '40',
			'title' => 'We Are More Aware About  The Safety Concerns Today Than In The Past',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘We are more aware about the safety concerns today than in the past’</strong></p>
<p>
	<img align="right" alt="Rameshwor Thapa, Airlines Operators Association of Nepal " height="314" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/rameshwor_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></p>
<address style="text-align: right;">
	<br />
	<strong>Rameshwor Thapa</strong></address>
<address style="text-align: right;">
	<strong>President&nbsp;</strong></address>
<address style="text-align: right;">
	<strong>Airlines Operators Association of Nepal (AOAN)</strong></address>
<p>
	<strong><br />
	</strong></p>
<p style="text-align: justify;">
	<strong>What is the size of the aviation insurance market in Nepal?</strong></p>
<p style="text-align: justify;">
	When talking about the insurance size, the Nepali aviation insurance business is small in global comparison. However, it has an addressable size in the context of the South Asian countries. That means the aviation insurance market in Nepal is neither big nor small but of medium size in terms of money as well as the number of insurers involved in this business. We now pay USD 8 to 9 million in premium to international companies annually.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Why is the aviation insurance premium so high in Nepal? How can we lower it?</strong></p>
<p style="text-align: justify;">
	The re-occurrence of air crashes have contributed to the increment of aviation insurance premium. The open sky aviation policy has helped the mushrooming of airliners in Nepal while the infrastructure remains almost the same. And there may be many issues concerning safety issues. The dramatic increase in premium is also because of the climate and weather. Importantly, trunk route operators have fewer problems in comparison to the STOL (short takeoff and landing) route operators mainly because of the high hills and high altitude. In STOL, mainly in helicopters, there are many instances of accidents beyond what could be conconsidered as normal. &nbsp;</p>
<p style="text-align: justify;">
	Now there are more airports and other facilities which could be rated higher in safety. We are organizing many safety seminars and programmes to lower the premiums with the safety much assured. There have been programmes enhancing the safety measures and we are very much confident that we would be able to enhance safety measures. We are more aware about the safety concerns today than in the past. The audit reports by ICAO and other organizations have diversified it further and made it clear also. Aircraft and passenger safety should be the airliners’ main concern. If we maintain all this - for enhanced safety in the aviation sector - definitely the premium will come down.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There have been more than 50 major accidents in the past 10 years. Why is the frequency of aerial accidents so high in Nepal?&nbsp;</strong></p>
<p style="text-align: justify;">
	It is very sad and bitter fact. The increasing premium in aviation insurance is making it difficult for the airline companies. These days we are trying to improve the security in the aviation sector and are not expecting such accidents again. We are working to reduce such accidents by organizing different seminars and programmes to enhance safety in the aviation sector. Through these safety seminars, we are being able to make the stakeholders aware about air safety. There, we make the pilots aware about focusing on safety while the stakeholders update themselves with different issues and activities in the aviation sector. All the people involved in this sector should understand that not compromising any safety measures but maintaining them will help mitigate the risks. Visual Flight Regulation (VFR) should not be allowed to go through the clouds. &nbsp;If we follow all these safety measures, definitely the risks have to go down. Civil Aviation Authority of Nepal (CAAN) should monitor these flights and instruct accordingly.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The annual claims payout in the aviation insurance has been constantly rising. This is bound to further increase the already significantly high aviation insurance premium. How are we going to tackle this problem?</strong></p>
<p style="text-align: justify;">
	We are concerned about this problem. Basically, if we are able to enhance safety measures, it would help to lower the premium paid out to reinsurance companies. Most of the re-insurers are quite convinced that we would be able to maintain safety properly. End of the Maoist war has also spread positive message to the reinsurers. In the past, we had to pay US$ 60 million premium in third party liability though we owned small aircraft. After knowing the problem, Nepal government addressed this. And now we have to pay some 10 million dollars for the same. The thing is, once we fix the safety problem, the premium will come down.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There are various types of aviation insurance policies in the world. Are all of them available in Nepal?</strong></p>
<p style="text-align: justify;">
	There are not various types of insurance policies in the aviation insurance. The available insurances are air-craft’s insurance, passenger’s insurance, cargo insurance, crew-members insurance- including others. There are insurance policies with same periphery and nature and are normally practiced in other countries as well. Now there are different types of reinsurance market but the problem is they take our situation as an alarming one. I think the situation is not that alarming. Some of the reinsurance companies really want to work and support the Nepali aviation sector which includes Indian as well as western reinsurance companies. A new aviation group in Malaysia is also interested in this business. Moreover the re-insurer companies are not of various types; they are of a singular nature and type.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. What’s your impression of the summit?&nbsp;</strong></p>
<p style="text-align: justify;">
	It was definitely helpful to us. I think the reinsurance companies that were finding threats in our sky are convinced that the premium which we are paying is not justifiable. We hope that in the coming days they won’t increase the premiums and won’t take our sky as an alarming one for aviation insurance. They got a chance to understand our aviation environment and we had a chance to put the reality in front of them. We were able to prove that there is neither any violence in the country nor any threat in the aviation sector. We were able to prove that we are quite committed to maintaining safety and that we are continuously working on it. We have learnt from past accidents and we are committed to avoiding such accidents.&nbsp;</p>',
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		'Article' => array(
			'id' => '1963',
			'article_category_id' => '40',
			'title' => 'NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013 : Panacea For Growth, Saluting The Best',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&ldquo;The political agenda dominated the national discourse and popular action in the last six decades of democratization of Nepal. Now is the time to evolve into the phase of economic agenda being on the top. The private sector of Nepal is the engine of growth, being efficient and cost-effective, and the government is to facilitate it through investment security, enabling laws like new Industrial Enterprise Act and Foreign Direct Investment Policy, et al.&rdquo;</div>
<div>
	&nbsp;</div>
<div>
	Thus spoke Shankar Koirala, Minister for Finance, Industries &amp; Commerce, Government of Nepal, inaugurating the maiden edition of the NewBiz Business Conclave &amp; Awards 2013, held in Hotel Soaltee Crowne Plaza on August 24.</div>
<div>
	&nbsp;</div>
<div>
	Nothing could have captured the mood, the spirit and the essence of this Conclave better than this statement. The Conclave was dedicated to finding a roadmap to doubling the economic growth from current 3.6% growth of the GDP to 7%, and beyond.</div>
<div>
	&nbsp;</div>
<div>
	In groups of three to five speakers, a large number of fore-ranking economists, thought-leaders, businessmen and invited guests from abroad focused on what may make the great Himalayan promise fulfilled and Nepal moving from the status of Least Developed Country to a Developing One within a decade by doubling its growth.</div>
<div>
	&nbsp;</div>
<div>
	&lsquo;Yes! We Can!&rsquo; was the spirit. &lsquo;Can Do&rsquo; was the motto. Even problems were noted as challenges to be tackled sooner or later. Indeed, for some time past now, in spite of several economic challenges, there has been a gradual amelioration of the situation too.</div>
<div>
	&nbsp;</div>
<div>
	Decades of political unrest, bitter ideological conflict, a shaky frame-work of democracy, despondency among some sections of the people, and challenges to entrepreneurship and of infra-structure have surely brought in an air of hopelessness among some youths. And, there is a large number of educated or skilled youths who are leaving the country for greener pastures around the world. It is not a wonder that Nepal receives as remittance equivalent to nearly a quarter of its GDP.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Not withstanding the challenges, every Nepali at heart dreams for turning the nation of exquisite beauty into the Switzerland of Asia. Every educated Nepali rightly wants to reap the best economic advantages of being land-locked between two large and fast developing neighbours, India and China. And, today, most adult citizens of this nation are waiting for ensuing elections to be held in time and peacefully, and political parties agreeing on a common economic agenda to take the country into a prosperous future.</div>
<div>
	&nbsp;</div>
<div>
	That was the spirit of the speakers in the Conclave (more details in later sections). Just a sampling of the views expressed in the Conclave:&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Last year service sector in Nepal grew by 6% and industry by 3% and hence it is not difficult to achieve 7% overall growth in a couple of years in Nepal. Industries here are running at half their capacity and just a better capacity utilization with a better labour situation and investments will double the growth.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Dr Yuba Raj Khatiwada</strong></div>
<div style="text-align: right;">
	<strong>Governor, Nepal Rastra Bank</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Vocational education is on the rise in Nepal, which is encouraging. The small and medium industries sectors are surviving by sheer hard work rather than an enabling business environment, and they must be encouraged.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Rameshore Khanal</strong></div>
<div style="text-align: right;">
	<strong>Former Finance Secretary</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;There are ample opportunities to promote specific districts with specific business focal points, like Dhading can be the organic district in order to access and expand the market of vegetables which covers the one-third of the Kathmandu market&hellip;.. Timely election being held, political class must rise to the occasion towards drawing a&nbsp;</span><span style="font-size: 14px;">Common Minimum Economic Agenda, towards which we from Nepal Inc are working.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>-Suraj Vaidya</strong></div>
<div style="text-align: right;">
	<strong>President, Federation of Nepalese Chambers of Commerce &amp; Industry</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;It&rsquo;s not just heritage and adventure, there are lot of scope in Nepal in terms of business and MICE tourism (Meeting, Incentive, Convention &amp; Exhibition).&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Amran Abdul Rahman</strong></div>
<div style="text-align: right;">
	<strong>Director, Malaysia Tourism</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Nepal can take a cue from Vibrant Gujarat Summit and its success in the economy of Gujarat, and can similarly bring in big ticket investments for hydro-power, infrastructure, manufacturing, tourism, agri-business and mines.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Sukanti Ghosh</strong></div>
<div style="text-align: right;">
	<strong>Managing Director (India), APCO Worldwide, USA</strong></div>
<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Nepal has more than half a century of planned economic development attempt. To achieve this target, we have to mechanise agriculture, commercial herbs, vegetables and fruits.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>-Binod Chaudhary</strong></div>
<div style="text-align: right;">
	<strong>President, Chaudhary Group</strong></div>
<div>
	&nbsp;</div>
<div>
	Where do we go from here? Future is pregnant with possibilities indeed.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Let&rsquo;s begin with the changing face of road network.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The Economic Survey of the Finance Ministry in 2013 says that more than 10,000 kms of roads are blacktopped, almost 6000 kms of road have been graveled, apart from nearly 8500 kms of earthen roads in Nepal. Except Humla and Dolpa, all other 73 districts have road access. The road connectivity with China has also added value to Nepal&rsquo;s economic sector. With the government trying to make the road investment strategy clear and long-term, there is enhanced interest of the private sector too in investing herein. The Public-Private-People Partnership driven Kathmandu-Kulekhani-Hetauda tunnel road is the signature evidence of this positivism.</div>
<div>
	&nbsp;</div>
<div>
	Coming to health and education, Nepal is on a positive direction to largely meet the Millennium Development Goals by 2015. Primary school enrolment has already crossed a whopping 95%, though at the secondary education level it is still one on three eligible children in education, in spite of some increase over the years. The latest infant mortality rate is at 9 per thousand live births, and maternal mortality rate has dropped to 229 per 100,000 live births, making the picture reasonably better than most South Asian neighbors. Significantly, nearly 4500 health institutions of various dimensions are providing health services to some 28 million people in this country. Nepal Living Standard Survey notes that one on four Nepalis today are below the poverty line, much better a situation than a decade or two ago.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Hydropower hopes have eluded the Himalayan nation for decades. Nepal&rsquo;s vast water resources are said to be next only to Brazil. However, till date Nepal is producing only 600 Megawatts of electricity whereas the known sources of hydropower can produce above 80,000 Megawatts, and it is still counting. This one sector alone can change the face of this nation. There are some clear signs towards progress. Upper Tamakoshi project with 456 Megawatts is progressing fast based on eco-friendly run-of-the-river model. Six other projects totaling around 240 Megawatts are also in progress. However, this sector needs clear and effective long-term policies, investment friendly environment and political stability.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The Agriculture sector has also taken a boost with 41 projec vts running on first priority and nine projects kept in second priority by the government, as listed by the National Planning Commission. These projects include special agriculture production program, co-operative farming, micro irrigation, livestock health service, agricultural research program, and others. The per hectare productivity today is around Rs.160,000, of the land available for agriculture and only 20 % is irrigated, and the average income of agriculture laborer has crossed Rs.70,000 per annum. Not the best of situations, but still no one dies of hunger in Nepal.</div>
<div>
	&nbsp;</div>
<div>
	In the manufacturing sector, the average growth rate per year over the last five years has been close to 2%. Production of food products, beverages, cigarettes, shoes, soaps, cement and plastic products have grown more than 3% per annum in this period. More than a thousand medium to large industries employing 300,000 of people function alongside more than a lac cottage and small industries with 600,000 people employed. Higher electricity and more and better roads can work miracles in this sector.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Finally, Tourism. It flourishes in tranquility. Civil war and political instability hitting tourism hard for some time in the past, Nepal is now witnessing positive signs with the total tourist arrivals in 2012 figuring 600,000 only by the air route! The average stay and spending per person per day are still low with less than 40 dollars a day spent by tourists. With 10 five star and 27 three and four star hotels, Nepal has a long way to go to tap the full potentials of tourism, which can be comparable to Malaysia or beyond.</div>
<div>
	&nbsp;</div>
<div>
	Yes, there is a long way to go for this beautiful nation of hardworking, patriotic and industrious people from the Mountains, Hills and the Terai-Madhesh, a nation where women have a better position in the society than many other South Asian nations in general in spite of poverty, a nation where youths work and study together in cities to earn economic independence, a nation where hugely diverse people live, work and enjoy each other&rsquo;s festivals together.</div>
<div>
	&nbsp;</div>
<div>
	The Nation awaits visionary statesman-like leadership ahead and the collective will of many to make a difference in the comity of nations.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The historic NewBiz Business Conclave and Awards is just the right step towards this direction: bringing to the fore the national economic priorities, trying to create a national consensus towards Common Minimum Economic Agenda, bringing forth the voices of business leaders and economists, and creating role models from among Nepal Inc in a nation where most political parties at least officially shun business and profits.</div>
<div>
	&nbsp;</div>
<div>
	Rightly did the NewBiz Chairman Madan Lamsal say at the onset of the awards ceremony, &ldquo;It is said that our work is our love made visible. This is indeed our labour of love. It is a historic moment to come to this point where New Business Age and Aarthik Abhiyan, the nation&rsquo;s leading business publications, salute the best performers in business who have been doing well in spite of economic challenges and political instability. And I congratulate each of the ten winners whom you will know in some moments from now one by one, in advance. We honor ourselves by honoring you. You have not done anything for awards, but for growth and development, to generate profits, employment, and welfare of a lot of people. You are our role models. A nation, yearning to grow, to be counted in the comity of nations, salute each of you for your extra ordinary achievement which will inspire the youth to dream and strive for more.&rdquo;</div>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p1%20(Copy)(1).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 283px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						Minister for Finance, Industries, Commerce and Supplies, Government of Nepal, Shankar Koirala along with Newbiz Chairman Madan Lamsal and other distinguished guests launched a book titled &mdash; Nepalko Arthik Briddhi Ek Margachitra (Sambriddha Nepal Abhiyan) during the Conclave &amp; Award ceremony at Soaltee Crowne Plaza.</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
		<tr>
			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p2%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 443px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: center;">
						Invitees at registration desk of Newbiz Conclave &amp; Awards-2013</div>
				</div>
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<div>
	&nbsp;</div>
<table align="center" width="100">
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				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p3%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 365px;" /></td>
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			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						<div>
							Binod Chaudhary, President Chaudhary Group exchanging words with Professor Dinesh Chapagain and former finance minister Madhukar SJB Rana at Newbiz Conclave &amp; Awards-2013.</div>
					</div>
				</div>
			</td>
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<div>
	&nbsp;</div>
<table align="center" width="100">
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				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p4%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 285px;" /></td>
		</tr>
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			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						Minister for Finance, Industries, Commerce and Supplies, Shankar Koirala along with Dr. Yuba Raj Khatiwada, Governor of Nepal Rastra Bank, Newbiz Chairman Madan Lamsal and moderator of the Conclave Achyut Wagle during the interactive session of the Conclave.</div>
				</div>
			</td>
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	</tbody>
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<p>
	&nbsp;</p>',
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			'created' => '2013-10-08',
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			'description' => 'The Nation awaits visionary statesman-like leadership ahead and the collective will of many to make a difference in the comity of nations.',
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		'Article' => array(
			'id' => '1684',
			'article_category_id' => '40',
			'title' => 'Towards Prosperous  Nepal',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div>
	&nbsp;</div>
<div>
	What are the elements that shape the country&rsquo;s transition from volatile politics to stable democracy? All too often, policy analysts focus on the political process, while neglecting the vital role of economic reform in determining democratic success or failure.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In the last decade, high unemployment and lack of entrepreneurial opportunities posed serious challenges to Nepal&rsquo;s transition. On the other hand, the country faced growing unresolved grievances caused by issues such as misappropriation of private property, rampant corruption and widening inequality.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Yet, there is silver lining. Despite a decade-long political turmoil and armed conflict, the country&rsquo;s economy was successful enough to maintain its basic economic indicators in a positive direction. It is for sure that the country will go through a long and complex journey before the current political transition will settle to form a stable democracy. The question remains as to how to unleash economic prosperity in the current situation.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Many believe that the country can achieve prosperity if elections are held on time as political parties will agree on a common economic agenda to take the country into a prosperous future.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The government on July 14 announced the annual budget of Rs 517.24 billion for the Fiscal Year 2013-14 through an ordinance. This is the first time in two years that a government budget has been announced for the entire fiscal year before the fiscal year begins. The budget of the current fiscal year gives special emphasis on elections to the Constituent Assembly by earmarking Rs 16 billion to hold the CA election. The budget has also emphasised on sustainable development along with economic growth and stability.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The government is heading towards a dream of achieving the status of a &lsquo;developing country&rsquo; by 2022 through a three-year plan. Many suspect whether the Nepali economy can begin the journey of prosperity in the given circumstances. The experience of the last decade, however, shows that the country can achieve things if the CA election is held on time and if political parties are united on a common economic agenda.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Despite political instability, Nepal has witnessed a noticeable growth in all sectors during the last decade. In recent years, many banks and money transfer businesses have grown. Nepal was one of the highest receivers of remittance on the basis of the Gross Domestic Product (GDP) in 2011.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Between 1980-2012, Nepal&rsquo;s Human Development Index (HDI) rose by 3.8 percent annually from 0.234 to 0.463 today, which ranks the country 157 out of 187 countries with comparable data.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Nepal is one of the 189 countries committed to the Millennium Development Goals (MDGs), a pledge renewed in its three year plan (2010-2013). The data from MDG progress report for Nepal 2010 prepared in partnership between the government of Nepal and the UN country team indicates that Nepal may be able to achieve most of its MDG targets by 2015.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	There are noticeable improvements in other economic indicators too. The national poverty line has gone down to 25 percent, net enrollment rate has increased to 93.7 percent, under five mortality has reduced to 50 per 1000 live births and maternal mortality has reduced to 229 per 100,000 live births which is almost reduction by half in 10 years&rsquo; time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Be it the health and education sector or the manufacturing and industrial sector, the country has succeeded to achieve remarkable progress despite political instability during the last decade.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Improvements in health services have resulted in a decline in the mortality rate. The declining mortality rate coupled with high fertility rate has resulted in rapid population growth. Control of malaria and other epidemics and the expansion of medical and public health facilities also reduce morbidity and mortality in the country. School enrollments of both boys and girls at all levels have increased.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	There are rays of hope also in the hydropower sector too. Currently a power deficit country will be a power surplus one by 2018 if all ongoing projects will be completed within a stipulated time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Around a dozen of hydropower projects including 556 MW Upper Tamakoshi, 50 MW Upper Marsyngdi, 60 MW Trishuli 3A and 42 MW Upper Modi along with others are under construction. These projects are supposed to end existing massive power outage problem and lead the country into the era of industrialisation.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	During the conflict era, the tourism sector suffered a lot resulting in the closure of some renowned five-star hotels. The conflict also tarnished the image of the country in the global scene. However, the entire tourism sector has started to revive now and it is certainly no surprise that hotels have mushroomed in recent years. As the number of tourists and foreign business travelers in Nepal are growing in step with its economy, Nepal&rsquo;s rapidly maturing hotel industry is one of the key beneficiaries. The tourism sector has given much to the Nepali business community to cheer.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The total contribution of the travel and tourism sector to the GDP stood at RS. 119.1 billion in 2011, according to the World Travel and Tourism Council and was forecasted to rise by 4.8 percent in 2012 and by 4.1 percent per annum to NRP 185.5 by 2022.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Some of the road construction projects that are under the works raise hope in the realm of infrastructure development. Tripura Sundari to Satbanjha (25 km), Satbhanja to Gokuleshwar (54 km), Khodpe to Kalinga Bridge, Chainpur (62 km) are some major projects to connect rural Nepal by road access.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	These projects would lead to a 6 percent increase in the number of people with all-season road access and a 35 percent decrease in travel time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Educating and uplifting the status of the vulnerable and marginalised children, women empowerment through community-based livelihood enhancement projects is a tool to leap forward. Programmes of integrated rural development and nature conservation in the mountain region of Chitwan district is worth mentioning for steady rural reconstruction in Nepal.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Not only the telecom sector but also the entire Information and Communication Technology (ICT) sector has been witnessing a remarkable growth after the political revolution in 1990. Both growth and expansion of the ICT sector has lured many brands and companies to invest in the country. The monopoly of the state-owned Nepal Telecom has ended and many players have emerged in the telecom and ICT business.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Today, all districts of the country have telecom facilities and consumers are using state-of-art technology and sophisticated devices to prove themselves tech-savvy. The government and private sectors are mulling to utilise ICT to boost the economy by using its maximum potential to promote all sectors.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In recent years, the agricultural sector has also gained attention from the government as well as the private sector. The government&rsquo;s plan to modernise agriculture, ease the distribution of chemical fertilizers, step up the construction of irrigation projects would at least decrease the country&rsquo;s dependency on import for the agro-products, making the country self-reliant.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Green Kathmandu, Clean Bagmati campaign will lift the face of the river flowing through the capital. The Melamchi Drinking Water Project will solve the problem of acute shortage of water in the Kathmandu valley.&nbsp;</div>
<div>
	It is always said that the youth are not just leaders of tomorrow but partners of today.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The population of youth between the age of 15 and 29 is 6.131 million in Nepal. This accounts for 26.5 percent of the total population. Consolidating youth for prosperous development should be the main responsibility of the state, private sectors, and civil society.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The nation should take advantage of young talent and energy, simultaneously solving problems of violence, instability and abusive behaviour. Considering these facts, it is necessary to invest energy and capacity embodied in the youngsters in a constructive way for the development of our country by making the rural youth competent and responsible.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Since we are going through a post conflict period, the state machinery should not neglect this mass. The government should come up with a plan to engage these large numbers of youth in creative and entrepreneurial ventures. This is the need of hour of our country. Also, it is the only way to enhance our youth with their energy and efforts.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In a country like Nepal, real development Let us dream together that one day the rural youth of Nepal will be able to lead not only the development process but also play a vital role in the economic, cultural and political sectors.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	As in an essay by noted litterateur Laxmi Prasad Devkota entitled &lsquo;Is Nepal Insignificant?&rsquo; where he eloquently writes about the prospects of Nepal, this country has tremendous potential for economic growth. But all we need to boost the country&rsquo;s economy are commitment from the political leadership, positive thinking of the general public and sincere and genuine efforts from the private sector.</div>
<div>
	&nbsp;</div>',
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			'description' => 'In an ideal situation, we have hopes of becoming Switzerland. In reality, our conversation begins with negative news. It seems Nepalis are very enthusiastic to change the country but put in little effort for their own part',
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		'Article' => array(
			'id' => '1446',
			'article_category_id' => '40',
			'title' => 'Towards Inclusive Growth',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size: 12px;">It was India&rsquo;s Montek Ahluwalia who coined the phrase &lsquo;inclusive growth&rdquo; in the 1970s with the World Bank (WB) Report &ldquo;Redistribution with Growth&rdquo;; and later it was reckoned that $ 1 per day (currently $ 1.25 per day) as being the line of absolute poverty which had to be traversed to be pro-poor and &lsquo;inclusive&rsquo;.&nbsp;</span></div>
<div>
	&nbsp;</div>
<div>
	Whereas Marx wanted &ldquo;forced redistribution&rdquo; of assets of the feudal and bourgeois classes for inclusion, Ahluwalia wanted redistribution through legal, monetary and fiscal interventions. The problem with both was that, as socialists, the concept lacked faith in the middle class as the true vanguards of democracy-- and the private sector as the true engineers of efficient and rapid economic growth and employment creation.</div>
<div>
	&nbsp;</div>
<div>
	And so this $ 1 a day &lsquo;absolute poverty&rsquo; thesis of Montek Ahluwalia gave birth to the Human Development thesis of Pakistan&rsquo;s Mahbul Haq, which basically sought &lsquo;inclusion&rsquo; by creating equality of opportunities for all those excluded, especially women and the girl child.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Haq pioneered the human capital revolution which got us to think of creativity and productivity as the true source of prosperity and human welfare and not the usual underscoring of the importance of natural, physical or financial capital. He got us to think of people as more than just labour. And he made them the centerpiece of development.</div>
<div>
	<img alt="" src="/userfiles/images/cs1.jpg" style="float: left; margin: 0px 10px 0px 0px; width: 220px; height: 328px;" /></div>
<div>
	The Human Development Index is his lasting legacy. Haq learnt from the experience of Pakistan in the 1960s that one could have 7% GDP growth and also suffer acute inequalities and inequities to exclude the poor from the fruits of growth&mdash;and worse, exclude 50% of the population of women who needed to be empowered by the State. He also re-introduced the concept of &lsquo;human security&rsquo; which was the foundation on which the Japanese economic miracle of the 1950s-70s occurred with little or no natural resources.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&lsquo;Growth&rsquo; and &lsquo;development&rsquo; are related but different concepts. Growth theories apply to developed nations whereas development theories apply to underdeveloped nations mired in hunger, malnutrition, illiteracy, ill health, superstition, deprivation, exploitation and underemployment of human resources.</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth also refers to the need for a &lsquo;balanced growth&rsquo; between (a) agriculture and manufacturing and (b) urban and rural areas of a nation. Thus inter &ndash;industry analysis and input-output models were developed and regional economics became a separate discipline to deal with geographic inequalities in growth. (As early as the 1970s Centre for Economic Development and Administration (CEDA) under Tribhuvan University, intellectually led by the likes of Dr Harka B Gurung and Dr Ratna SJB Rana were doing such seminal work for Nepal for regional balance by examining possible growth centres and corridors, which was waylaid by foreign aid that opted for extraneous models of development. This eventually sowed the seeds of conflict in Nepal with its over-emphasis on the role of the central bureaucracy and a Kathmandu-centric model of development. I am referring to the failed Integrated Development Projects (IRDPs) of the World Bank and the several bilateral donors working in isolation of each other to practically make the central bureaucracy their own dysfunctional and corrupt fiefdoms. It failed because it was costly and opted for decentralization rather than devolution with bottom up local leadership development with people&rsquo;s participation).</div>
<div>
	&nbsp;</div>
<div>
	In the 1980s, a new growth and development paradigm was born-- &lsquo;sustainable growth&rsquo;. It was felt that the cost to the natural environment was not being factored in by the GDP approach as the very success of growth resulted in externalities such as environment degradation, pollution of air, soil, water&mdash;one may say, development&rsquo;s impact was toxic. For most of the time, growth theory was driven by concern for its pace and pattern of growth. Then comes concern for its impact on Nature. And thus was added a new dimension to &lsquo;inclusion&rsquo; theory.&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs2.jpg" style="float: right; margin: 0px 0px 0px 10px; width: 352px; height: 175px;" /></div>
<div>
	In the 1990&rsquo;s, led by Nepal&rsquo;s Gandhian statesman PM Krishna Prasad Bhattarai, a new concept was bestowed to the development paradigm. &lsquo;Pro-poor growth&rsquo; was the term coined by the SAARC Independent Commissioners in 1992 (see the SAARC Secretariat Report: &ldquo;Meeing the Challenge) as it began to grapple with growth models that tended to &lsquo;walk on one foot&rsquo;, as it were. Thus it emphasized Structural and Extended Structural Adjustment Programmes (SAP and ESAP) passionately underwritten by the International Monetary Fund (IMF) and the World Bank in tandem to usher economic and financial reforms since the 1980s.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The SAP and E-SAP model of growth and development ignored the contribution that the poor, especially women, could make to growth by treating them as objects of development and not the subjects. Hence the call for &lsquo;pro-poor growth&rsquo; with Organizations of the Poor to be engaged in self help, self development and self management by designing locally based growth and development models unique to its social, cultural and ecological environments. For this to happen, it called for Social Mobilization of the Poor by the State so that they can participate in development and democracy through the mechanism of the Market. It believed that South Asia could have 9% GDP growth with 3% being contributed by the poor themselves, if it followed a strategy of walking on two legs &ndash; (a) priority to agriculture (b) development of labour intensive SMEs in manufacturing (c) human development and human security (d) social mobilization of the poor to create Organizations of the Poor to pursue their own models of growth and at their own pace as also to countervail the power of the ruling and rural elites. Its lasting contribution is the inclusion of &lsquo;social capital&rsquo; as a viable and relevant development model where the local culture should be included, and seen as an enduring asset, along with the traditional local institutions in the form of Community-based Organisations (CBOs) and TVOs. (Alas, the NGOs, sadly, were trying to make them irrelevant being driven by extraneous social and political forces under the banner of universal human rights )&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs3.jpg" style="width: 525px; height: 175px; margin: 10px 25px;" /></div>
<div>
	&nbsp;</div>
<div>
	<strong>Development through Devolution (The Alternative Model for 2015-20)&nbsp;</strong></div>
<div>
	&nbsp;</div>
<div>
	It is unlikely that a top-down driven development paradigm comprising national planning, state enterprises, labour unions &hellip; will allow inclusion of all. This can only happen when opportunities are created for all by supporting markets garnished by agrarian, economic, financial, administrative and labour reforms. Not least maximizing a bottom up development paradigm with maximum scope for local leadership development and culture-specific innovations to achieve MDGs goals and targets by the locals themselves in tune with their own capacity to deliver. This requires that the national think tanks adopt more than Chamber&rsquo;s Participatory Research Approach (PRA) for Participatory Action Research (PAR) as underlined by the SAARC Independent Commission on Poverty Alleviation of 1992.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth must mean growth with productive employment by creating opportunities for jobs and by investing in one&rsquo;s human capital development of own self and family members for the jobs --in the context of globalization The primary focus of inclusive growth must be on quality of human capital and so needs inclusion of Private Sector as the engine of growth since they create jobs for employees and opportunities for the self-employed.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Planning must be macro, meso and micro, all harmonized strategically. The Macro Plan must project the desired structure of the economy for the next 25 years and the five year plan must be a human resource development plan that addresses the human capital requirements for the perspective economy of the future (say 2035) based on manpower supply and demand projections and plans judiciously integrated with the educational plan that opens avenues for vocational, apprenticeship, technical and technological for the variety of occupations in the national economy and in the global labour markets.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In other words, the State will have 5 Five Year Rolling Macro Plans that will be supplemented by Meso Plans to strategically manage education, health, gender, children, youth, old age, disabled, castes and creeds, urbanization, water, energy, ICT, transportation, investment, saving, capital markets, credit flows, exports, imports, taxation, and also corporate governance, entrepreneurship development, R &amp;D; S&amp;T, and monopoly regulation, for example, depending on the number of Ministries to be created. The fewer the Ministries the better. Let us emphasize that these ministries must move towards being a &lsquo;managerial civil service&rsquo; (as happened in East Asia to turn their economies into Tigers) and not continue to function as the colonial &lsquo;administrative civil service&rsquo; mired in red tape and acutely devoid of horizontal communication and coordination.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Competition is the name of the game and with it goes merit &ndash;not reservations. Hence private sector must seek to gather the &lsquo;fortune at the bottom of the pyramid&rsquo; as part of their core business strategies. And SMEs and Micro Enterprises and Social Entrepreneurs are vital actors in the formulation and execution of the national and sector plans, as well as the creation of urban clusters and supply chains.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive growth requires that we take in a host of factors and forces like geography, demography, social factors and forces, governance etc and hence has to be participative to require decisions at all levels and all actors &ndash;not just the state guided by the NPC with its very weak basic and applied research capacities coupled with rapid turnover of planners with the political changes. Such NPCs are a waste of national resources and should be converted to an Advisory Economic Council with the Prime Minister Office (PMO), if they are genuinely needed. What is now needed is Integrated Sector Programming and National Performance Budgets governed by a Fiscal Management and Responsibility Act as exists, for example, in South Korea and India.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth is growth that benefits each and every segment of a society with no exclusions whatever. This means when women&rsquo;s work at home they be paid for and their contribution to the GDP be duly recognized and rewarded.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Nepal&rsquo;s development plan has to be framed in the perspective of the opportunities from India, China and Bangladesh in due cognizance of our economic structure and development constraints. It requires our policy planners and private sector to be proactively engaged in national and sector dialogues with each other: to set down targets and outcomes for coordinated policy and designing of sector and multi sector programmes aligned with the annual performance budgets. We have to assess feasible economic growth targets for each 5 yr periods first and foremost in consensus with the political parties&mdash;and not be driven by external agents and fanciful notions of the political leadership who are very, very weak in their understanding of economics and finance.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	We have to set achievable GDP and sector targets and act accordingly to secure them jointly with the local governments, NGOs and private sector Each target must be supported by country-wide action plan and programme. For example (a) eradication of illiteracy (b) raising GDP by 5.5% (c) agri growth at 4.0% (d) inflation down to 7.5% (e) industrial growth by 10% -- devolved to districts with their own targets set locally (f) lower capital output ratio through more efficient planning, choice of foreign aid and eradication of graft and corruption; ICT for better governance (g) gender budget for gender inclusion to name a few development agenda topics.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Immense macro economic benefits have accrued from remittances which is now 25% of GDP. It has helped reduce poverty from 42% (1996) to 24% (2012). It has prevented Nepal from economic collapse and stabilized economic growth at the midterm growth rate of around 3.5- 4% between 2005-13.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Yes, costs have been borne at the household and individual levels with the pain and suffering of international migration and debts incurred for it. However, one can take advantage from the challenges by planning the remittance economy better so as to empower women head of household and the girl child with the skills to fill in the job vacancies as happened during WWI ad WW II that liberated women once in for all in the West.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs4.jpg" style="width: 525px; height: 175px;" /></div>
<div>
	&nbsp;</div>
<div>
	<strong>Conclusions&nbsp;</strong></div>
<div>
	&nbsp;</div>
<div>
	South Asian concept of Inclusiveness is this: all growth and development models must be ingrained in our civilizational heritage&mdash;not that of the Greeks, Romans or Christians or Marx and Mao. Inclusiveness should be based on one&rsquo;s culture adapted for internally to achieve modernity and based on pragmatism for the greatest public good. It seeks to be grounded not on a Capitalist or Socialist Society with all its ideological baggage but on a Humane Society where Planet Earth is a Global Village embodied and enriched by pluralistic cultures and cosmopolitan individuals with multiple identities with equal value, as was bestowed upon us by the eternal wisdom of Swami Vivekanada.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth and Development are super structure means to an end that needs to be holistically entrenched with sound social, economic, ecological and political structures that are themselves inclusive. Let us summarize the parameters and their variables here below:&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(A) Inclusive Society: formalization of CBOs, organization of the poor, social mobilization, preservation and promotion of multiple identity; maximum role for the social organizations; protects and promotes the joint family system rather than the state acting as nanny and nurse and creates a Commonwealth of Plural Societies with various civil society organizations &ndash;and their national federations-- to represent professional, business, religious, gender and cultural interests;&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(B) Inclusive Economy: access to credit for all; entrepreneurship development; traditional skill development; community ownership of resources; markets that respect consumer and ecological sovereignties;&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(C) Inclusive Environment: harmonious nature-people relationships in the context of global warming and climate change , and</div>
<div>
	&nbsp;</div>
<div>
	(D) Inclusive Polity: direct democracy; inclusive institutions &ndash;education, health, access to justice; rule of law; community leadership; empowerment of gram panchayats; modernity through local leadership and local culture ; proportional representation of communities and gender in all political parties for inclusive governance and political leadership and political space to duly elected civil society federations to be represented rotationally in the Upper House of Parliament so that short run political interests are countervailed by long-run non political civil society interests.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Finally, given all the above parameters and their variables for inclusion there is really no need for an ethnic-based Inclusive State to render justice to all and the next generations. Yes, we need an Inclusive Constitution to not exclude any. Primarily, to ensure the supremacy of the Constitution and the rule of law by having independent institutions to check the abuse of power by the political authority and guarantee accountability, transparency, competition and merit in the body politic for the larger public good.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	I submit, we do not even need a federal state. Much wiser to devolve responsibility to the 4440 VDC and 75 Districts and Municipalities for dynamic and harmonious Inclusive Growth and Development of an independent and sovereign Nepal with its territorial integrity intact.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<em><span style="font-size:11px;">(Rana is Professor South Asian Institute of Management (SAIM) and Former Finance Minister.)</span></em></div>
<div>
	&nbsp;</div>
<div>
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			'created' => '2013-07-19',
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			'description' => 'It is a la mode, these days, to speak of ‘inclusive growth’ and ‘inclusive development’. In Nepal’s case, the Maoists have extended it to ‘inclusive State’: and with it the constitutional and political contours of new Nepal are yet unclear—and remain extremely contentions.',
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		'Article' => array(
			'id' => '1077',
			'article_category_id' => '40',
			'title' => 'Nepali Banking In Transition Through Mergers And IPOs',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p>
	<strong>By Siromani Dhungana (with inputs from Yagya Banjade and Rashesh Vaidya)</strong></p>
<p>
	<em>As per the NRB’s latest data, the country has 31 commercial banks, 87 development banks, 80 financial companies and 21 micro-finance companies. The number shows that there is tough competition among banks and financial institutions (BFIs) forcing them to face multiple challenges. The major one is surely the capital base. The introduction of merger policy has created opportunities for banks to increase their capital base. At the same time, the BFIs are also going ahead with Initial Public Offerings (IPOs) to increase their capital base. In this issue, New Business Age tries to present an overview of how the Nepali banking sector is going about with mergers and IPOs.</em></p>
<p>
	The trend of announcing merger plans by the banks and financial institutions (BFIs) has gathered pace in recent months. According to Nepal Rastra Bank, a total of 28 banks and financial institutions (BFIs) have already merged with each other reducing the total number of BFIs by 15. Similarly, some 24 BFIs have already received Letter of Intent (LoI) to be merged with one other, and upon completion of this process, the total number of BFIs will reduce by another 14. And, other 12 BFIs have applied for the LoI. Once these too complete the process, the number of BFIs will be reduced by additional 5.</p>
<p>
	This shows that in spite of several weaknesses to implement monetary policy, Nepal Rastra Bank (NRB) has become quite successful in implementing its merger policy. Earlier, the central bank had announced packages of rebates, discounts, waivers and facilities to the BFIs opting for mergers. But now, the bankers themselves believe that merger has become compulsory for many banks which are suffering from the problem of low capital base and limited geographical coverage.</p>
<p>
	Similarly, a wave of Initial Public Offerings (IPOs) has started among the new BFIs. In the last Nepali calendar year that ended on mid-April, 20 BFIs issued IPOs, issuing shares worth Rs 5.6 billion. More offering such IPOs are in the pipeline. Though BFIs can increase their capital base also through Further Public Offering (FPO) of their shares, very few of them have opted for this route.</p>
<p>
	<strong>Need for Merger</strong></p>
<p>
	Apparently, the universal objectives of the merger or acquisition are to consolidate the capital, reduce operational expenses, expand business and maximise profits.&nbsp;</p>
<p>
	However, in our case, mergers of three distinct natures now seem to be in the offing.&nbsp;</p>
<p>
	Firstly, relatively large institutions are planning to create a larger capital base so they could compete with global players who could potentially begin their operations here owing to WTO arrangements.&nbsp;</p>
<p>
	The second type of merger would be compulsive of sorts as the NRB has asked the BFIs belonging to the same business house to integrate without any “ifs and buts’’.&nbsp;</p>
<p>
	The third types are those who fear the complete meltdown if they fail to merge soon to consolidate resources, introduce corporate best practices and reduce expenses.&nbsp;</p>
<p>
	Consolidation is becoming increasingly necessary as banks are struggling to give returns to their shareholders. Almost all BFIs are eyeing mergers, and the number of BFIs will come down notably in the next three years.</p>
<p>
	However, bankers say more incentives are needed to speed up mergers, particularly between commercial banks. For example, they have been demanding decrease in corporate income tax to 20 percent from the current 30 percent for a merged BFI.</p>
<p>
	As there is no environment for increasing capital by issuing rights shares and bonus shares as that will not be enough to raise capital to the required level, finance companies have no other&nbsp;option than to go for a merger. Many finance companies have thought that’s it’s better to opt for a merger than to face action from the central bank for failing to increase the capital to the required level next year.</p>
<p>
	Also the shaken public confidence on towards banking institutions due to recent problems in the banking sector and their inability to give proper returns to their shareholders, has forced the BFIs to increasingly lean towards consolidation.&nbsp;</p>
<p>
	Consolidation is necessary also to increase the paid-up capital since the possibility to increase of paid up capital by issuing rights shares is very slim. Moreover, the size of loans being demanded by single borrowers has been increasing in recent years. So, BFIs having low paid-up capital cannot fulfill such demand.&nbsp;</p>
<p>
	Similarly, merger becomes an urgent need also because due to the terms agreed by Nepal while gaining membership of World Trade Organisation (WTO), financail services sector is open for foreign investors beginning 2010. So, foreign banks can open their branch in nepal. If big foreign banks open their branches in Nepal, the Nepali banks with small capital base may not be competitive.</p>
<p>
	<strong style="font-size: 12px;"><span style="font-size: 12px;"><br />
	</span></strong></p>
<p>
	<strong style="font-size: 12px;"><span style="font-size: 12px;">The Journey of BFIs Mergers in Nepal So Far</span></strong></p>
<p>
	The journey of merger of Nepali banks began nine years back. In 2004, Laxmi Bank merged into it Himalayan Saving and Finance Company (HISEF), and it was done according to the broad provisions of Company Act and Bank and Financial Institution Act (BAFIA). The then Narayani Finance and National Finance had merged to become Narayani National Finance following the same Acts. Similarly, Himchuli Development Bank and Birgunj Finance merged and became H &amp; B Development Bank aalso merged under the same act.</p>
<p>
	That experience highlighted a need for special rules to govern this process. But was only in May 2011 that Nepal Rastra Bank came up with a special rule to facilitate mergers between BFIs.</p>
<p>
	When Nepal Rastra Bank (NRB) introduced the Merger By-laws in May 2011, many had still doubted whether Nepali banks and financial institutions (BFIs) would go for mergers as the concept was a relatively new for the country. &nbsp;That doubt seemed valid for some time. But soon a merger spree started among BFIs. Birgunj Finance and Himchuli Bikas Bank sought LoI from NRB in 2004 and completed their merger the same year becoming H&amp;B Development Bank. The process gained memorandum after that. (See box for the list of BFIs merged so far.)</p>
<p>
	<img alt="Nepal Rastra Bank" height="345" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_nrb.jpg" style="margin: 0 10px 0 0;" width="595" /></p>
<p>
	As the list on the box shows, most of the BFIs that have chosen to merge are development banks and finance companies merging with another institution of same category or with a commercial bank. However, latelycommercial banks too have started merging with another commercial bank. The recent such example is the merger process started by Bank of Asia Nepal and Nepal Industrial and Commercial Bank Limited.</p>
<p>
	<strong>Major Provisions of Merger By-Law</strong></p>
<ol>
	<li>
		<strong>‘A’, ‘B’ and ‘C’ class financial institutions can merge into each other. ‘D’ class FI can merge with another ‘D’ class FI only.<br />
		</strong></li>
	<li>
		<strong>FIs that want to merge should form a separate merger committee and sign Memorandum of Understanding (MoU).<br />
		</strong></li>
	<li>
		<strong>The due process including MoU should be completed before applying to the Nepal Rastra Bank (NRB)for Letter of Intent (LoI). NRB should hold a meeting within 15 days of receiving LoI application.<br />
		</strong></li>
	<li>
		<strong>NRB decides whether to issue LoI or not after conducting discussions and detailed study of concerned institutions.<br />
		</strong></li>
	<li>
		<strong>Due Diligence Audit should complete within six months of receiving LoI from the central bank.<br />
		</strong></li>
	<li>
		<strong>The detailed factual report comprising assets and liabilities of concerned institutions should be submitted to the NRB.<br />
		</strong></li>
	<li>
		<strong>Copy of the decision regarding name, address and share ratio of concerned financial institutions should be submitted to NRB.<br />
		</strong></li>
	<li>
		<strong>Action plan of concerned financial institution including date of operation after merger process is completed should be submitted to NRB.<br />
		</strong></li>
	<li>
		<strong><span style="font-size: 12px;">Other documents as prescribed by the NRB should be submitted to NRB.</span><br />
		</strong></li>
</ol>
<p>
	<strong><span style="font-size: 12px;">NRB can ask for merger if the following situation prevails:</span></strong></p>
<ol>
	<li>
		<strong>In case representatives of a family, business group, firm or company are found assuming posts in the boards of directors of two or more BFIs and/or their financial conditions remain unhealthy.</strong></li>
	<li>
		<strong>If the non-performing loans (NPL) exceeded 5 percent of the total loan portfolio for 3 consecutive years.&nbsp;</strong></li>
	<li>
		<strong>Increase in systematic risk (i.e. in a situation when a BFI seems likely to fail to meet liabilities).</strong></li>
	<li>
		<strong>If independent operation of a BFI is causing negative impact on the banking system.</strong></li>
	<li>
		<strong>If a BFI faces prompt corrective action (PCA) for three times or more.</strong></li>
	<li>
		<strong>If NRB finds that merger of systemically important BFIs will strengthen the entire banking system.</strong></li>
</ol>
<p>
	<strong>Facilities for Merger</strong></p>
<p>
	The new regulations have pledged relaxation on provisions for capital structure, shareholding limit for promoters, credit-deposit ratio, borrowings limit for promoters and deprived sector lending, among others.</p>
<p>
	If the merger causes increase in the shareholding percentage of any promoter beyond the stipulated limit, such promoters get five years time to bring down their stake within the limit.</p>
<p>
	Likewise, merged institutions are allowed additional three years to bring CD ratio down to the of 80 percent. Similarly, promoters get additional three years to bring their borrowing (loans) down to less than 50 percent of the total shares they hold in the merged BFI.</p>
<p>
	In a bid to lure BFIs to merger, the central bank has even promised a discount in refinance rate by one percentage point to the merged institution. It has also offered to lower penal rate on standing liquidity facility by half for three years in case two or more BFIs merged into one.</p>
<p>
	The central bank has also opened upgrading of &nbsp;fianancial institutions relaxed the restriction on upgrading of a BFI to encourage merger. A BFI can upgrade to higher category (category ‘C’ to ‘B’ and from ‘B’ to ‘A’) if the institution seeking to upgrade is formed through a merger).</p>
<p>
	The rules also promise to recommend to the government for exemption of taxes in case a BFI faces losses during the course of merger facilities include the time duration of using SLF will be expanded to 30 days from the existing 5 days for three years after completion of merger process. NRB can provide other facilities according to the need of the banks.&nbsp;</p>
<p>
	<strong>Challenges of Transition</strong></p>
<p>
	Most of the consumers do not get sense of transition of banks merger because in an ideal case, all banking services continue to function normally even during the transition. ATM cards work, checks consumers write do not bounce and consumers will be able to get the all services.&nbsp;</p>
<p>
	&nbsp;However, banks face several problems during the transition. Among others major challenges of merger are as mentioned below:</p>
<p>
	<strong>1. Brand Name</strong></p>
<p>
	The identity of the institution in the market is through the brand name. The image of an entity is joining with a brand image. So, the settlement in the brand name of the newly formed merged entity is essential.</p>
<p>
	<strong>2. Composition of board of directors (BoD) and shareholders</strong></p>
<p>
	The major decision makers in any entity are the board of directors and the shareholders. If the disputes arise among these people, the performance as well as the future of the entity will be directly hampered. So, the number as well as the persons that should represent at the BoD should be settled in cool mind.</p>
<p>
	<strong>3. Structure of the new management team</strong></p>
<p>
	The new merged entity comprises of the management team from two or more different entities. So, clear visions should be set-up for making the new management team which could handle the merged organization in coming days.</p>
<p>
	<strong>4. Employees Management</strong></p>
<p>
	As the organization is merged, at the same time the employees also come together. The major assets any organization is human resources. So, if the merged entity can not handle properly the grievances of the employees, the situation of disputes may arise. &nbsp;</p>
<p>
	<strong>5. Ownership Division</strong></p>
<p>
	The problem of division among the ownership might arise in the merged entity. The questions of shareholding as well as takeover of the share equity might create division among the shareholders. &nbsp;</p>
<p>
	<strong>6. Banking Software</strong></p>
<p>
	Various types of software are being used by the BFIs for the smooth operation. Huge cost and efforts had been gone in maintain the software in an organization. But if the two different entities are using two different types of banking software, the problem as well as cost may arise in the settlement of the books of accounts.</p>
<p>
	 </p>
<p>
	<strong>Need of Separate Acquisition Law</strong></p>
<p>
	Acquisition is, however, yet to come under the legal regime in the country. The central bank has said that it has been doing necessary preparations to introduce a separate legal mechanism on acquisition to encourage consolidation of the financial sector. Acquisition of financial institutions is difficult at present since there is no related legal provision, says CEO of Kailash Bikas Bank Krishna Raj Lamichhane who is also the president of Development Bankers Association.</p>
<p>
	NRB officials say that about half a dozen banks had held talks with the central bank about the possibility of acquiring regional development banks and finance companies to reach out to new areas. Acquisition is a relatively faster process as the challenges of merger such as it can be done once the buyer and the seller reach an agreement. Bankers say the introduction of legal provisions for acquisition will help bring down the number of BFIs in the country. The central bank needs to be careful while issuing new licenses and also the ability for smaller banks to withstand the economic crisis.</p>
<p>
	<strong>IPO Attraction</strong></p>
<p>
	The Nepali investors have been showing very encouraging response to the IPO of the company, especially of commercial banks. The data of Securities Board of Nepal (Sebon) reveals that 22 companies have got approval for the IPO from mid July 2012 to till the mid May of 2013. Shares worth of Rs 5.78 billion came in the market during this period. Of the total 22 companies, eight development banks, eight commercial banks, three finance companies, one insurance company and one hydro-power company.</p>
<p>
	<strong>The Direction Ahead</strong></p>
<p>
	The foremost challenge to the country’s banking sector in the realm of merger of banks is to create an environment where major financial institutions will go for merger voluntarily, says Upendra Paudyal, vice-president of Nepal Bankers Association (NBA).</p>
<p>
	The overall financial health of merged institutions has been found to be improved so far, he opines, saying the primary intention of the merger should be to strengthen capacity of concerned banks and financial institutions.&nbsp;</p>
<p>
	The policy taken by the Nepal Rastra Bank has resulted in positive signs since the market players in the arena of banks and financial institutions have saturated, adds Paudyal says. “Merger bylaws have played very crucial role in lowering the number of BFIs.”&nbsp;</p>
<p>
	But there is a question about the way forward of merger in the banking sector. The mathematical aspect has been highlighted so far by both the government and the BFIs, Paudyal says. It is cultural aspect which largely determines the success of merger. Sincere effort from all concerned parties is a must to make a merger journey a great success in the counry, he concludes.</p>
<p>
	&nbsp;&nbsp;</p>
<hr />
<p>
	<strong>In Nutshell</strong></p>
<p>
	The first case of merger between BFIs in Nepal was the merger of HISEF Finance Ltd into Laxmi Bank Ltd in 2004</p>
<p>
	<strong>BFIs that have merged already</strong></p>
<ul>
	<li>
		Himchuli Development Bank &amp; Birgunj Finance forming H&amp;B Development Bank Ltd</li>
	<li>
		Narayani Finance &amp; National Finance forming Narayani National Finance</li>
	<li>
		Nepal Bangladesh Bank &amp; Nepal-Sri Lanka Merchant Bank forming Nepal Bangladesh Bank Ltd</li>
	<li>
		Kasthamandap Development Bank &amp; Shikhar Finance forming Kasthamandap Development Bank Ltd</li>
	<li>
		Business Development Bank &amp; Universal Finance forming Business Universal Development Bank Ltd</li>
	<li>
		Machhapuchchhre Bank &amp; Standard Finance forming Machhapuchchhre Bank Ltd</li>
	<li>
		Global Bank &amp; IME Financial Institution &amp; Lord Buddha Finance forming Global IME Bank Ltd</li>
	<li>
		Infrastructure Development Bank &amp; Swastik Merchant Finance forming Infrastructure Development Bank Ltd</li>
	<li>
		Annapurna Development Bank &amp; Suryadarshan Finance forming Supreme Development Bank Ltd</li>
	<li>
		Vibor Bikas Bank &amp; Bhajuratna Finance forming Vibor Bikas Bank Ltd</li>
	<li>
		Alpic Everest Finance &amp; Butwal Finance &amp; CMB Finance forming Synergy Finance Co Ltd</li>
	<li>
		Shine Development Bank &amp; Resunga Development Bank forming Shine Resunga Development Bank</li>
	<li>
		Pashupati Development Bank &amp; Udyam Development Bank forming Axis Development Bank Ltd</li>
	<li>
		Prudential Finance &amp; Gorkha Finance forming Prudential Finance Company Ltd</li>
	<li>
		NIC Bank &amp; Bank of Asia forming NIC Asia Bank Ltd (Process ongoing)</li>
</ul>
<p>
	<strong>Letter of Intent (LoI) Received &nbsp; &nbsp;&nbsp;</strong></p>
<ul>
	<li>
		Premier Finance &amp; Imperial Finance to form Premier Imperial Finance</li>
	<li>
		Royal Merchant Banking and Finance, Rara Bikas Bank &amp; Api Finance</li>
	<li>
		Araniko Development Bank &amp; Surya Development Bank</li>
	<li>
		Central Finance Ltd &amp; Patan Finance Ltd</li>
	<li>
		Diyalo Bikas Bank Ltd &amp; Professional Bikas Bank Ltd</li>
	<li>
		NDEP Development Bank &amp; Hama Finance Ltd</li>
	<li>
		Siddhatha Development Bank &amp; Public Development Bank Ltd</li>
	<li>
		Five Regional Development Bank to form One National Level Gramin Bikas Bank</li>
	<li>
		Shangrila Development Bank Ltd &amp; Bagheshwor Development Bank</li>
</ul>
<p>
	<strong>LoI In Pipeline&nbsp;</strong></p>
<ul>
	<li>
		Lalitpur Finance Ltd &nbsp;&amp; Progressive Finance Ltd</li>
	<li>
		Sagarmatha Merchant and Finance Ltd &nbsp;&amp; Reliance Finance Ltd</li>
	<li>
		Social Development Bank &amp; Corporate Development Bank</li>
	<li>
		Vibor Bikas Bank &amp; Kist Bank Ltd</li>
	<li>
		Manakamana Development Bank Ltd, Infrastructure Development Bank, Yeti Finance Limited &amp; Valley Finance Ltd.&nbsp;</li>
	<li>
		Khadbari Bikas Bank &amp; Birat Laxmi Finance</li>
	<li>
		Global IME Bank &amp; Social Development Bank Ltd.</li>
</ul>
<p>
	<strong>Merger Process Dumped</strong></p>
<ul>
	<li>
		Kathmandu Finance Ltd &amp; Civil Merchant Bittiya Sanstha Ltd</li>
</ul>
<div>
	<hr />
</div>
<p>
	<strong><span style="font-size: 12px;">Financial Indicators of the Merged Entities</span></strong></p>
<div>
	<p>
		The major financial indicators of the merged entities have slightly improved compared to the pre-merger situation.&nbsp;</p>
	<p>
		Machhapuchhre Bank Ltd (MBL) had a higher level of non-performing loan (NPL) before merger than of the Standard Finance Limited (SFL). The NPL of MBL was at 2.84 percent whereas; the NPL of SFL was at 0.73 percent. After the merger, the NPL of MBL stood at 2.73 percent according to the financial report for mid-July 2012.</p>
	<p>
		The Credit Deposit (CD) Ratio of SFL was very high at 104.27 percent whereas, the ratio was at good level at 74.62 percent for MBL before merger. &nbsp;After the merger the CD ratio of MBL was maintained at 73.07 &nbsp; percent. But the Return on Assets (ROA) declined below one percent.</p>
	<p>
		&nbsp;Among the three merged entities in Global IME Bank Ltd, the financial performance of Lord Buddha Finance Ltd was not good. Its Capital Adequacy Ratio (CAR) was very high at 33.76 percent. &nbsp;Similarly, the NPL and ROA of the finance company were at 3.99 percent and -0.61 percent respectively. The NPL of merged entity, Global IME Bank Ltd stands at 1.54 percent as of the third quarter report of the FY 2012-13. At the same time the ROA is at 1.13 percent.</p>
	<p>
		Similarly, in Vibor Bikas Bank after merger of Bhajuratna Finance &amp; Saving Co. Ltd. has a high level of CAR at 14.42 percent but at the same time the level of NPL has increased to 32.63 percent till the third quarter of the F/Y 2012-13. The ROA of the bank is also seen negative. It is at -1.95 percent.&nbsp;</p>
	<p>
		Vibor Bikas Bank is again going ahead with a proposal of merger with Kist Bank Ltd. &nbsp;The NPL of the Kist Bank Ltd is seen comparatively lower than of the Vibor Bikas Bank. The ratio was at 32.63 percent and 7.89 percent for Vibor Bikas Bank and Kist Bank respectively as of third quarter of the F/Y 2012-13. &nbsp;Both the banks have posted the negative ROA during the third quarter of the FY 2012-13. Similarly, Vibor Bikas Bank has not been able to maintain the good level of CD ratio during the period.</p>
	<p>
		Recently, Bank of Asia Nepal Ltd and NIC Bank Ltd have received LoI from NRB for merger. The banks have already announced a plan to publish their combined financial report of the fourth quarter of F/Y 2012-13 in the name of the merged entity, NIC Asia Bank Ltd. Both the banks’ indicators show that they are in a financially sound position. After the merger they are likely to emerge even stronger in the banking market.</p>
	<p>
		<img alt="Financial Indicators of Some Merged and to be Merged BFIs:" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_financial_indicators.jpg" style="margin:0 10px 0 0;" /></p>
</div>
<div>
	<hr />
	<p>
		<strong style="font-size: 12px;"><span style="font-size: 12px;"><br />
		</span></strong></p>
	<p>
		<strong style="font-size: 12px;"><span style="font-size: 12px;">‘Merger is a need of the entire financial system’</span></strong></p>
	<p>
		 </p>
	<p>
		<strong><img alt="Bhaskar Mani Gyawali, Spokesperson, NRB" height="240" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_bhaskar.jpg" style="float:left; margin:0 10px 0 0;" width="200" />What &nbsp;is the situation of merger in the banking and financial Institutions (BFIs)?</strong></p>
	<p>
		The trend of merger in BFIs has grown lately. &nbsp;After the introduction of Merger Bylaws in 2011 by Nepal Rastra Bank (NRB), 22 financial institutions merged to become 10 within a year. This is very encouraging.</p>
	<p>
		<strong>Why is there a need for merger in the financial market?&nbsp;</strong></p>
	<p>
		Financial institutions have mushroomed in the country, thanks to the liberal policies adopted by Nepal Rastra Bank in the past. Given the size of our financial system, the number of BFIs looks more than normal. Many of these institutions had invested in the real estate sector without any long-term benefits. NRB was forced to fix a ceiling on real estate investment by banks after a surge in the volume of nonperforming loans.</p>
	<p>
		Investment by financial institutions in unproductive sectors caused a liquidity crisis in the market. These institutions also failed to maintain corporate governance. &nbsp;Financial institutions should be able to return money to depositors as required. NRB had introduced Merger Bylaws 2011 to improve the condition of financial institutions.</p>
	<p>
		<strong>Why are there no expected improvements in merged institutions?</strong></p>
	<p>
		Merged organizations are much improved in comparison to single and troublesome financial institutions. The process of merger has helped institutions increase their capital base and ability to return the people’s money.&nbsp;</p>
	<p>
		<strong>Can you briefly tell us the merger process?</strong></p>
	<p>
		Merger is a need of the entire financial system of Nepal. The share swap ratio is obviously an issue of tension in the pre-merger phase. NRB provides counseling services to all institutions which want to go for merger. The process is very simple. At first, the BFIs should take the special decision of merger thorough the General Meeting of shareholders. Then they should sign a Memorandum of Understanding (MoU) for merger. Then, after forming a merger committee, they should apply to the central bank for the Letter of Intent. NRB conducts interaction with concerned stakeholders and provides insights including strengths and weaknesses of the merging BFIs. If BFIs want to continue the merger process even after the interaction, NRB approves the LoI. Concerned financial institutions should approve new structure which will come into effect after the completion of the merger process.</p>
	<p>
		&nbsp;NRB should always deal the entire merger process carefully because merger should not promote monopolistic business.</p>
	<p>
		<strong>What are the post-merger complications? Does NRB intervene if complications arise in the post-merger phase?</strong></p>
	<p>
		Some minor complications are inevitable in the post-merger phase. Salary disputes, implementation of new structure and other managerial work create several complications. NRB provides the necessary assistance if the situation so demands. Similarly, the central bank may opt for positive intervention if the post-merger complications start to hurt the entire transactions of the concerned BFI.</p>
	<p>
		<strong>Are the BFIs reluctant for mergers?</strong></p>
	<p>
		Definitely not. But merger is a complex process. Two or more institutions can opt for a merger when they develop a sense of mutual trust. Many chiefs have to agree to make one chief. Jumbo administrative committees have to be downsized. The present scenario of mergers is pretty exciting.</p>
	<p>
		<strong>Is merger a less attractive proposition because of the low incentives for the same?&nbsp;</strong></p>
	<p>
		First, organizations should be aware about the merger process. They should be aware that merger is not for NRB but for them. This is because it is their responsibility to make the organization stronger and sustainable. Providing different incentives and schemes to organizations is like luring a child by giving them chocolates. It is unnecessary to entice them like that.&nbsp;</p>
	<p>
		<strong>The incentives provided to the merging institutions have been discontinued. What about reintroducing these insentives to the institutions that will merge now ?</strong></p>
	<p>
		NRB couldn’t continue the facility because of the incomplete budget. &nbsp;As soon as we have a full budget, NRB will renstate these facilities. The central bank is committed to facilitate the merger process.&nbsp;</p>
	<p>
		<strong>Where has NRB’s preparation regarding bylaws related to acquisition reached?</strong></p>
	<p>
		Legally, BFIs &nbsp;which want to acquire the stake of any &nbsp;other financial institution can do so. The only difficulty is that NRB does not have any specific guideline and legal provision to tackle the issue of acquisition. NRB, however, is very supportive if any financial institution wants to acquire the stakes of other institution.</p>
	<p>
		<strong>Is NRB considering forced mergers?</strong></p>
	<p>
		 </p>
	<p>
		NRB is not for forced mergers because there is a need for mutual bonding in order to operate the merged entity smoothly. But NRB might force institutions which are in miserable financial status and cannot improve the same over a period of time.</p>
</div>
<div>
	<hr />
</div>
<p>
	<strong>Initial Public Offering in Banking Sector</strong></p>
<p>
	<strong><br />
	</strong></p>
<p>
	<img alt="Niraj Giri" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_niraj.jpg" style="float:left; margin:0 10px 0 0;" width="200" />The capital market is a mechanism created to facilitate the exchange of financial assets with a maturity period of more than a year. It is a broad term embracing the buyers and sellers of securities and all the agencies that assist the sale and resale of securities.&nbsp;</p>
<p>
	Capital market activities started in Nepal in 1937 with the issuance of the shares of Biratnagar Jute Mills Ltd. However, a more structured market activity started with the establishment of a stock trading mechanism in 1976 along with the establishment of the Securities Exchange Center. Enactment of the Securities Act and establishment of the Securities Board in 1983 gave the impetus for the development of capital market in Nepal in a more organized manner. In the early 90s after the success of the first People’s Movement, the government adopted liberal economic policies and opened up various areas to the private sector. This paved the way for the entry of private banks into the country’s financial market.&nbsp;</p>
<p>
	With the opening up of the economy, banks and financial institutions (BFIs) from the private sector have been in the forefront of making initial public offerings (IPOs). The IPOs of BFIs are also the most sought-after IPOs in the secondary market. In fact, most of the trading that takes place in the secondary market is that of the shares of companies from the banking and financial sector. So, this sector has played a major role in the development of our capital market., the number of companies listed at Nepal Stock Exchange (NEPSE) as of May 17, 2013 was 224 of which 29 are commercial banks and 142 development banks and finance companies. Besides, 68 per cent of the daily trade at NEPSE is of the shares of commercial banks. This shows that the secondary market in Nepal is highly dominated by the banking sector. Why is this sector so dominant?</p>
<p>
	There are various reasons. First and foremost is the licensing requirement of Nepal Rastra Bank (NRB), the central bank. NRB has made it mandatory for BFIs to issue their shares to the public. BFIs have to go for IPOs within two years of obtaining the operating license from the central bank. Besides, in IPOs, funds flow from the provider to the user. This means the contribution of IPOs to financing companies is direct in the sense that it provides them with additional funds for either starting a new business or expanding or diversifying the existing ones. This might not sound true for banking sector companies. However, IPOs fetch them funds which they can use to lend or to meet the various other requirements such as capital requirement set forth by the regulator. IPO also gives the public investors a partial ownership of the company and an opportunity to be represented at its board of directors. This representation of public directors in the board helps to bring about transparency and good governance at the higher echelon of the company.</p>
<p>
	When Janata Bank Ltd &nbsp;issued an IPO worth Rs 600 million last year, it was believed that the bank had ill-timed the issuance as the secondary market indicator, the NEPSE index, was bearish. &nbsp;Investors were pulling out of &nbsp;the secondary market and the merchant bankers related with the IPOs, too, were worried about the subscription. However, when the IPO closed, the issuance had been oversubscribed by 2.43 times. This showed that the investors still had confidence in the IPOs of commercial banks. The IPO of Janata Bank was followed by that of Civil Bank Ltd which &nbsp;issued an IPO worth Rs 800 million which, in turn, was oversubscribed by 6.38 times. Recently, Commertz &amp; Trust Bank Ltd made an IPO worth Rs 600 million which was oversubscribed by 11.64 times. During the same period, IPOs of some development banks and finance companies were undersubscribed or even cancelled.&nbsp;</p>
<p>
	NRB has put a lot of emphasis on good corporate governance practices in the banking sector and banks are under constant supervision of the central bank. Barring a few, most banks have been giving good returns, in terms of cash dividend and bonus shares to their investors. The investors, too, have benefitted from a higher capital gain from the trading of shares of banks, compared to those of companies from other sectors. There is also a belief amongst the investors that commercial banks do not fail. This has boosted the investors’ confidence in banking stocks.&nbsp;</p>
<p>
	Both the government and the central bank have been persuading the BFIs for mergers in order to strengthen the banks and consolidate the growth of the financial sector. Some financial institutions have opted for merger and the effects of this will be seen on the market in the coming days. Though difficult, mergers will definitely strengthen the banks' capital base and enhance their operational efficiency through synergic effects. This, in turn, will attract more investors to banking stocks.&nbsp;</p>
<p>
	<span style="font-size:10px;">(The author is a Director at SEBON)</span></p>
<div>
	<hr />
</div>
<p>
	<strong>Problems of Merger</strong></p>
<p>
	<strong><br />
	</strong></p>
<p>
	<img alt="Krishna Raj Lamichhane" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_krishna.jpg" style="float:left; margin:0 10px 0 0;" width="200" />The country’s banks and financial sector witnessed a significant change with the introduction of merger bylaw by Nepal Rastra Bank (NRB), the central regulatory body of banks and financial institutions (BFIs). The bylaw has provided unique opportunities to BFIs to overcome the problem of capital inadequacy.</p>
<p>
	Nepal Rastra bank enacted merger bylaw in 2011 and the pace of merger have accelerated after that. The reasons of mergers among banks and financial institution is obvious, they want expand their presence in the market. Some major reasons of merger are as mentioned below:</p>
<p>
	<strong>Increase capital base:</strong> The reason of most of the mergers is that banks want to increase their capital base. The central bank has urged banks to enhance capital base to expand their services into the urban areas especially in the capital.</p>
<p>
	<strong>Expand services: </strong>Banking consolidation helps concerned institutions expand their services. For instance, merger provides opportunities of utilizing each other’s brand and public relation jointly. Banks and financial institutions can expand their services after increasing their capital base. Similarly, merger helps banks to increase investment capacity that will make them capable of investing in huge projects.</p>
<p>
	<strong>Implementing new and innovative ideas: </strong>Banking consolidation through merger will allow BFIs to explore chances of coming up with innovative ideas. Together, the banks and financial institutions can enhance their operation system and implement effective management.</p>
<p>
	However, the process of merging of banks and financial institutions is not free of hassles. There are basically two types of hassles to complete the merger process: i) external or created by the regulator and ii) internal or the managerial problems within banks and financial institutions.</p>
<p>
	At present, the central bank has made it mandatory to stop trade of shares after starting the merger process which, I think, should be changed. I do not see any logic and rationale behind this provision.&nbsp;</p>
<p>
	Similarly, the government does not provide any facility to the banks and financial institutions which want to be merged. I feel that the government should reduce corporate tax to 25 per cent from existing 30 per cent for five years after merger process complete. It is necessary because BFIs should invest huge chunks of money in managerial activities to complete the merger process. It is really challenging to ensure smooth transition and resolution of conflict likely to surface among the staff due to hostility, ego clashes or layoffs during the merger process.</p>
<p>
	It is a fact that the existing merger process between various financial institutions seem to be more forceful in nature. I do not mean that the Nepal Rastra Bank has put any pressure for mergers but the circumstances have made BFIs merge. I think the government should create an environment where banks and financial institutions voluntarily show their readiness to be merged.</p>
<p>
	<span style="font-size:10px;">(Writer is Chairman of Development Bankers Association and CEO at Kailash Bikash Bank)</span></p>
<div>
	<hr />
</div>
<div>
	<div>
		<strong>Merger and Its Challenges</strong></div>
</div>
<div>
	<strong><br />
	</strong></div>
<p>
	<img alt="Guru Prasad Paudel" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_guru_prasad.jpg" style="float:left; margin:0 10px 0 0;" width="200" />Business organizations can combine with each other in a various ways. One of the most common approaches is Mergers and Acquisition (M&amp;A), which combine independent firms under common control. After unveiling a merger bylaw, the practices of M&amp;A in Nepali banking sector has been increasing tremendously. Around two dozen BFIs merged each other and created 13 institutions. More than two dozen BFIs have got the letter of intent (LOI) to go for the merger. Even if merger has been practiced in the financial sector to cope the various issues, there has been no real academic effort to extensively appraise how employees are reacting, adapting and coping with the new realities in the post– merger period as well as how BFIs are achieving their business targets.&nbsp;</p>
<p>
	Furthermore, we should not forget that in achieving the objective of BFIs merger, quite a number of intrinsic risk factors may be involved both during and post merger period which should have to be address by regulators as well as by bank BOD and senior management level.&nbsp;</p>
<p>
	Literature says, merger that has been practiced internationally is not less challenging. Some inherent features of merger as well as some country specific problems add more challenges in it. In the past, tangible aspects (e.g. capital, raw materials, equipment etc.) were the major issues of merger. Now the scenario has changed, and intangible aspects (e.g., human capital, culture, knowledge, goodwill, brand etc) are emerging as key challenges. &nbsp;</p>
<p>
	We adopted merger strategy very lately; though it has more than 120 years long history internationally. Nepal dose not have separate Act about M&amp;A, so there may arise some legal risk in the future. Today, large BFIs desire to acquire small financial institutions but we have no Acquisition provisions. M&amp;A is significantly affected by the geo-political condition of the country. Present situation of our country is unfavurable for mergers because of the rise in concept of divergence and dissolution, which is a serious external threat for merger. Lack of specific Act and provisions regarding acquisitions and geo-political scenario are major challenges. Besides these, some challenges and problems are as follows:&nbsp;</p>
<ul>
	<li>
		Top executives and top level management team may leave unexpectedly. When they leave the merged organization the expected synergy will be evaporated.</li>
	<li>
		Expected synergies evaporate also because of cultural differences. Research says only 23 percent of all M&amp;A earn their cost of capital.</li>
	<li>
		Data migration plays vital role in the merger, sometimes this single task will be multi-time expensive than other factors of merger.&nbsp;</li>
	<li>
		Expenses get increased because of disposal of old stationeries, write-off provisions of duplicated branches.&nbsp;</li>
	<li>
		Power politics can be a major obstacle to the success of M&amp;A.</li>
	<li>
		Agency problem is another key challenge of M&amp;A.</li>
	<li>
		Who are going to leave from the BOD &nbsp;will be an anxious issue.&nbsp;</li>
	<li>
		It further creates anxiety while selecting CEO or top level management officials because the institutions undergoing merger have their own individual CEO or higher management authorities.&nbsp;</li>
	<li>
		Due Diligence Audit Report (DDAR) does not give accurate price of the institutions hidden contingent liabilities may get added which further enhance the challenge in the merger.&nbsp;</li>
	<li>
		Management of employee of duplicated branches is yet another high value expense occurred due to merger.</li>
</ul>
<p>
	<span style="font-size:10px;">(Writer is Deputy Director at Nepal Rastra Bank. The views expressed here do not necessarily represent the views of NRB)</span></p>
<div>
	 </div>',
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			'created' => '2013-06-07',
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			'keywords' => 'Nepali Banking In Transition Through Mergers And IPOs, Cover story, Banking, Mergers, New Business Age, June 2013',
			'description' => 'As per the NRB’s latest data, the country has 31 commercial banks, 87 development banks, 80 financial companies and 21 micro-finance companies. The number shows that there is tough competition among banks and financial institutions (BFIs) forcing them to face multiple challenges. The major one is surely the capital base.',
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			'id' => '1000',
			'article_category_id' => '40',
			'title' => 'Revisiting Nepali Consumers: Facts, Trends & Business Impacts',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="font-size: 12px;">Many believe that Nepal is still an under-explored market given the potential it has. The market is growing and chances of further expansion are still very high due to the increased awareness and affordability of consumers. The world’s leading brands available in Nepal have created an environment in which consumers can expect to get what they want. &nbsp;Every product has been putting their effort to get a hold in the market by expanding their consumer-base.&nbsp;</strong></p>
<p>
	<strong>Based on Purchasing Power Parity (PPP) Nepal’s Per Capita Income has doubled in 32 years. Recently released Human Development Report 2013 by the United Nations Development Program (UNDP) has revealed that the gross national income (GNI) per capita in PPP increased by 101 percent to US$ 1,137 in 2012 compared to 1980. Inflow of remittance and an large portion of youth population has made Nepal a potential market to companies.</strong></p>
<p>
	<strong>In this issue, New Business Age provides marketers and companies with some interesting insights to know the changing consumers landscape in Nepal.</strong></p>
<p>
	<span style="font-size: 12px;">In the capital Kathmandu, varieties of goods and shopping places can be found within a few minutes from their homes. People can find products according to their affordability. There are varieties of price ranges and choices to consumers. Family run groceries are still the norm in Nepal, but supermarkets and malls are also doing good business.&nbsp;</span></p>
<p>
	Despite economic slowdown, the consumption of fast-moving consumer goods (FMCGs) has not dropped but constantly going up. Nepal has been witnessing satisfactory growth in per capita food and non-food consumption expenditure. Household consumption of fast moving consumer goods (FMCGs) has also gone up. Multiple factors have contributed in expansion of Nepal’s market.&nbsp;</p>
<p>
	The visible growth of Nepal’s economy, especially income of the people, over the last decade has put more money in the pockets of the country’s middle class, prompting retailers to target this group of consumers.&nbsp;</p>
<p>
	<strong>Census 2011</strong></p>
<p>
	In the report of National Population and Housing Census 2011 published by the CBS, the population of the country has grown to 26.6 million with 1.35 percent annual growth rate since the last census that was concluded in 2001.</p>
<p>
	Thus, Nepal is the market of 26.6 million consumers including 12.8 million male population and 13.64 female. The census report shows that Terai region constitutes of 50.27 percent (13.31 million) of the total population. Similarly, hilly and mountain areas constitute 43 percent (11.39 million) and 6.73 percent (1,781,792) respectively.</p>
<p>
	Highlights:</p>
<ul>
	<li>
		Population: 26,494,505</li>
	<li>
		Households: 5,427,30</li>
	<li>
		Average household size: 4.88</li>
	<li>
		Sex ratio (number of males per 100 females): 94.2 (Number of male per 100 female)</li>
	<li>
		Urban population: 17 per cent</li>
	<li>
		Population density (average number of population per square km): 180</li>
</ul>
<p>
	<strong>Age Groups and Corresponding Market</strong></p>
<p>
	The age of the consumer determines the type of products sellable in the market.&nbsp;</p>
<p>
	Normally, a young person is fashion conscious in the choice of products, while a middle-aged person is status conscious.</p>
<p>
	The age group of 10-14 years of the population is seen the highest (when compared to other 5-year gap intervals) in Nepal as per the 2011 census data. Also, the female population is slightly more than that of males. There are 13,645,463 women in Nepal, which accounts for 51.5 percent of the total population, while the number of males is 12.84 million. &nbsp;Higher population of women shows that the market of cosmetics items, clothing and boutiques are very good in the country.&nbsp;</p>
<p>
	<img alt="Age Groups and Corresponding Market, Cover Story, Revisiting Nepali Consumers" height="304" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_age_group_and_corresponding_market.jpg" width="506" /></p>
<p>
	<strong>Youth Population</strong></p>
<p>
	The census data shows that more than half of the population, about 55 per cent, is below 25 years of age. According to the 2011 census report, some 34.91 per cent of the population is aged below 14 years and another 19.97 per cent is aged between 15-24 years.</p>
<p>
	This is one of the reasons why many world players are coming and establishing their presence here in the Nepali market. Young Nepalis today expect a lot more from their lives, and often face pressure that was unfamiliar to earlier generations. Young people often want to keep up with global fashions and market trends. Their passion of following global fashion and trends has created many opportunities in Nepali market. Though Nepali population is mostly young, the size of old-age population has been increasing as well offering increased opportunity for business that provide goods and services to aged.&nbsp;</p>
<p>
	<strong>Family Size and the Family Life Cycle</strong></p>
<p>
	The buying decision in a large family is more complex as several individuals play different buying roles, such as that of initiator, influencer, prayer, buyer and users, economist Dr Chiranjivi Nepal says. He opines that the large families generally buy a single brand while small families are found to be more brand-switching. Consumers’ product varies according to the stage of their family life cycle. The consumption pattern of a bachelor is different from that of a man with several children.</p>
<p>
	The average household size of Nepal is 4.88 as per the 2011 census data. The household size of the urban and rural was seen 4.32 and 5.02 respectively. The largest household size was seen in Rautahat district with 6.44 and the lowest of 3.92 in Kaski district.</p>
<p>
	<strong>Remittance</strong></p>
<p>
	Around 1,500 Nepali workers go abroad for employment every day and it is their remittance that keeps the Nepali economy afloat, opines economist Nepal.&nbsp;</p>
<p>
	According to the World Bank, Nepal ranked 6th in the world among top remittance-receiving countries in 2011, with remittances making up 20 per cent of its GDP. A total of 56 per cent of the total households in Nepal receive remittances. Of which, 48 per cent comes from international labour migration, according to Central Bureau of Statistics. Accounting for more than 20 per cent of the GDP, migrant labourers brought in Rs 359 billion in the last fiscal year alone.</p>
<p>
	<img alt="Remittance, Revisiting Nepali Consumers" height="206" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_remittance.jpg" width="515" /></p>
<p>
	<strong>Education</strong></p>
<p>
	Of the total population, 39.04 percent are at the level of primary education. The male population dominated all the regions of the country in the literacy level. 65.94 per cent of the total population are literate (can read and write) in Nepal. &nbsp;2.52 percent of the population of Nepal can read only as per census data. Kathmandu has the highest literacy rate and Humla, the lowest with 86.3 per cent and 47.8 per cent respectively. The school enrollment of Nepal is seen at 95.1 per cent as per census data. This means over 95 per cent of school going age population is actually enrolled in schools. This indicates to very good market for educational material and education-related services.</p>
<p>
	<img alt="Population Aged 5 years and above by Literacy Status, Revisiting Nepali Consumers, Cover Story" height="215" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_population_5years_above_literacy_status.jpg" width="528" /></p>
<p>
	<strong>Toilet Use</strong></p>
<p>
	More than one-third, i.e., 38.17 per cent of the Nepali population does not have toilet facility. In Terai region, a total of 51.24 per cent of population are still without toilet facility.&nbsp;</p>
<p>
	However, the trend of constructing the flush toilet and squat toilet with septic tank is increasing in the country including both in the rural as well as in urban areas. Therefore, the business of sanitary ware has also been going up.&nbsp;</p>
<p>
	<img alt="Toilet Use, Revisiting Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_toilet_use.jpg" /></p>
<p>
	<strong>Rural Market&nbsp;</strong></p>
<p>
	Though the business volume may be big in Kathmandu and urban areas, Nepali villages offer very good markets in terms of the number of consumers as about 82.30 per cent of the population of the country is living in rural areas.&nbsp;</p>
<p>
	Interestingly even some parts of the urban population &nbsp;have rural consumption behaviour. And urban characters can be seen also in some rural areas due to the influence of remittance, for example. However, purchasing capacity of rural community is low compared to urban population. Rural population still depends on agricultural activities. The consumption habit, however, has been changing in the rural areas too. One reason is the road access and the other is education. Also the availability of electricity and cable TV as well as opening of cinema halls in those rural areas have been changing the consumption habit in rural Nepal.</p>
<p>
	Many companies have been launching products targeting the rural population. Comparatively low-cost products and micro-packing are main strategies adopted by companies to get a hold in rural areas.&nbsp;</p>
<p>
	<img alt="Rural Market, Revisiting Nepali Consumers, Cover Story" height="86" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_rural_market.jpg" width="390" /></p>
<p>
	 </p>
<p>
	<strong>Fuel</strong></p>
<p>
	According to National Population Census 2011, Nepal still relies heavily on firewood to fulfill its fuel demand for the purpose of cooking. However, the consumption of Liquefied Petroleum Gas (LPG) has significantly increased in the recent years which has created lots of space for the business of LPG stoves, regulators, pipes, cylinders and other necessary accessories.&nbsp;</p>
<p>
	One interesting fact about source of fuel for cooking is that big urban districts like those in the capital (except Lalitpur), Parsa, Kaski and Morang do not feature among the top users of electricity. Obviously the frequent power outage and cheap price of LP Gas have prompted the households ot shift to LP Gas in those districts.</p>
<p>
	<img alt="Fuel, Revisiting Nepali Consumers, Cover Story" height="717" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_fuel(1).jpg" width="389" /></p>
<p>
	<strong>Lighting Sources</strong></p>
<p>
	Electricity is seen as the major source of lighting for Nepali households. Total of 67.26 percent of the population is using electricity as the source of lighting. Similarly, kerosene is the second major source of lighting (18.28 per cent). But these households suffer from frequent power outage.</p>
<p>
	This has created much opportunities for the traders of invertors and batteries as well as solar power systems.</p>
<p>
	Therefore, business of electricity accessories such as bulbs, wires, poles and ceiling lights is doing well in Nepali market. At the same time, business of solar energy has also gone up and possibility of bio-gas related business is also very high in the Nepali market.&nbsp;</p>
<p>
	<strong><img alt="Lighting Sources, Revisiting Nepali Consumers, Cover Story" height="607" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_lightening_sources.jpg" width="385" /><br />
	</strong></p>
<p>
	<strong>Religious Cultural Factors</strong></p>
<p>
	In September 2012, World’s famous fast food chain McDonalds launched its first vegetarian restaurants in India targeting Indian Hindu. The reason of launching vegetarian products was obvious that McDonalds did not want to lose Hindu consumers.&nbsp;</p>
<p>
	Cut-throat competition among various companies and outlets has created a scenario whereby all companies try to lure consumers by offering what they want. Nepal is multi-religion country and companies may want to tap consumers according to religion.&nbsp;</p>
<p>
	Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services.&nbsp;</p>
<p>
	<img alt="Religious Cultural Factors, Revisitng Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_religious_cultural_factors.jpg" /></p>
<p>
	<img alt="Cultural Composition, Revisiting Nepali Consumers, Cover Story" height="393" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_religious_cultural_composition.jpg" width="496" /></p>
<p>
	<strong>Absent Population</strong></p>
<p>
	One in every four households (25.42%; 1.38 million households) reported that at least one member of their household is absent or is living out of country. Total number of absent population is found to be 1,921,494 in 2011 census against 762,181 in 2001. The highest proportion (44.81 percent) of absent population is from the age group 15 to 24 years. Gulmi, Arghakhanchi and Pyuthan districts reported the highest proportion of their population being absent (staying abroad).</p>
<p>
	<img alt="Top five Absent Population District, Revisiting Nepali Consumers, Cover Story" height="153" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_absent_population_district.jpg" width="595" /></p>
<p>
	<img alt="Top Ten Destination of Migrant Nepali Workers, Revisiting Nepali Consumers, Cover Story" height="764" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_remittance_migrant_workers.jpg" width="380" /></p>
<p>
	 </p>
<p>
	<strong>Media Consumption</strong></p>
<p>
	The media consumption patterns, profiles of audiences on different platforms and media types, and the effectiveness of advertising across platforms have been significantly changed over the last decade.&nbsp;<span style="font-size: 12px;">Consumers concentration has been shifted to the television from radio, according to Managing Director at JWT-Thompson Nepal Joydeb Chakravarty. “Ten years back the national media was radio but today more people watch television,” he says.&nbsp;</span></p>
<p>
	<span style="font-size: 12px;"><img alt="Media Consumption, Revisiting Nepali Consumers, Cover Story" height="262" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_media_consumption.jpg" width="521" /><br />
	</span></p>
<p>
	<strong>Computer and Internet</strong></p>
<p>
	Computers and Internet products are also growing day by day. The number of Internet users in Nepal has accelerated in the country. Access to the Internet has positive implications for society and the economy. A study carried out by Computer Association of Nepal (CAN) last year showed that the computer penetration rate in the country had crossed five per cent. The survey was carried out based on the record of import of computer monitors and branded laptops, according to CAN general secretary Narayan Neupane. The penetration rate of computer at present may have crossed eight, he says, adding that the trend of using computers is on the rise since schools, health institutions, clubs and other social groups in far flung areas of the country have started using computers for their day-to-day activities.&nbsp;</p>
<p>
	<img alt="Computer and Internet, Revisiting Nepali Consumers, Cover Story" height="171" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_telephone.jpg" width="531" /></p>
<p>
	<strong style="font-size: 12px;">Automobiles</strong></p>
<p>
	Nepal has been seeing the penetration of two- and four-wheelers increasing at a rapid pace, thanks to the expansion of road connectivity and increased income of citizens. Expansions of road network throughout the country and a steep rise in the number of migrant workers have played a catalytic role in the growth of automobile sales.&nbsp;</p>
<p>
	So, many automobile brands have been able to establish themselves and automobile has become one of the largest customs duty contributors in the country. Nepali consumers have been using four-wheeler ranging from the most expensive one to the cheapest Nano car. Similarly, Nepal-assembled brands such as Mustang and Sherpa has also been rolling on Nepali roads. &nbsp;</p>
<p>
	<img alt="Top three districts with various Vehicles facilities, Revisiting Nepali Consumers, Cover Story" height="280" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_vehicles.jpg" width="533" /></p>
<p>
	<strong>ICT and Mobile</strong></p>
<p>
	Not only telecom sector but also the market of entire Information and Communication Technology (ICT) has expanded over the last few years. As far as mobile market is concerned, Nepal has approximately Rs 15 billion transaction every year, according to chairman of Mobile Traders Association of Nepal Purushottam Basnet. Nepal has been very potential market for mobile phone sets and other ICT products.</p>
<p>
	<img alt="Top three districts with ICT and Mobile, Revisiting Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_ict_mobile.jpg" /></p>
<p>
	<strong>Home Appliances&nbsp;</strong></p>
<p>
	Sales of the home appliances have tremendously increased over the last year. The sales of refrigerators, washing machines, vacuum cleaners, LEDs and LCDs has boosted in the recent years. Besides, people living in urban areas are continuously upgrading their living standards, and home appliances are deemed as components that add value to their living condition. The market of home appliances has also increased in the rural areas too.&nbsp;</p>
<p>
	<img alt="Top three districts with  Refrigerator facilities, Revisiting Nepali Consumers, Cover Story" height="160" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_home_appliances.jpg" width="532" /></p>
<p>
	<span style="font-size: 12px;">Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services.&nbsp;</span></p>',
			'published' => true,
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			'keywords' => 'Revisiting Nepali Consumers: Facts, Trends & Business Impacts, Cover Story, New Business Age',
			'description' => 'Many believe that Nepal is still an under-explored market given the potential it has. The market is growing and chances of further expansion are still very high due to the increased awareness and affordability of consumers.',
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	(int) 5 => array(
		'Article' => array(
			'id' => '999',
			'article_category_id' => '40',
			'title' => 'Young Consumers Have Smart Perspective On How To Spend Money',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong>Mani Raj Dahal</strong></address>
<address>
	<strong>Country Manager</strong></address>
<address>
	<strong>The Nielsen Company Nepal Pvt Ltd</strong></address>
<p>
	<span style="font-size: 12px;"><br />
	</span></p>
<p>
	<span style="font-size: 12px;">It is very important to assess how the market is doing and what the current trends of consumption are to revisit the consumers. Nepal is still an unexplored market in many fields and, therefore, it offers possibilities of market expansion to companies. It is worthwhile to mention here that the spending and consumption habit of consumers are positive in Nepal, despite the huge political problems the country is going through.&nbsp;</span></p>
<p>
	<strong>Rising Consumerism&nbsp;</strong></p>
<p>
	There is a tremendous potential in the country for companies to expand their products and services.&nbsp;<span style="font-size: 12px;">The swelling consumerism has seen the introduction of a range of new products like ready-to-eat snack foods, breakfast cereals, textures vegetable protein foods and so on. Different brands of the same item and attractive packaging vie &nbsp;for the consumers’ attention.</span></p>
<p>
	<strong>Spending Capacity</strong></p>
<p>
	The increased spending capacity of consumers is really a good sign in the Nepali market. &nbsp;The inflow of remittance and tourism have contributed to increase the income of consumers. The purchasing power of consumers has a direct impact on the market expansion.&nbsp;</p>
<p>
	Every investor asks some questions before starting a business: how big is the market and what are the possibilities of growing? And the scenario in Nepal is not so bad. Though Nepali market is not that big, there’s enough room for new companies and brands.&nbsp;</p>
<p>
	<strong>Youth Focused Market</strong></p>
<p>
	At present, the consumption of Nepali young generation forms a thriving market. Young consumers are usually impressed with branded and quality goods and services then being purely price sensitive . Companies and service providers can take advantage of this to further set up their brand image.<span style="font-size: 12px;">The young generation enjoys a staggering amount of purchasing power in the country due to foreign employment and inflow of remittance. Young consumers not only have money, but also have smart perspectives on how to&nbsp;</span><span style="font-size: 12px;">spend money.&nbsp;</span></p>
<p>
	<strong>Consumerism and Socialisation</strong></p>
<p>
	It is really interesting to mention here that Nepali culture has changed over the years due to technology and consumerism.&nbsp;<span style="font-size: 12px;">Our socialization process has changed, compared to some years ago. Lifestyle and consumption habits are considered to be the main reason for the socialization and it is obvious that the process of socialization has changed throughout the last one or two decades. For instance, we can take café culture, business in Valentine Day or may be English New Year.&nbsp;</span></p>
<p>
	<strong>Nepali Products</strong></p>
<p>
	Entrepreneurship is something that will help the country to achieve sustainable development. The chances of entrepreneurship are very high in Nepal, all we need is creative minds and creative ideas. In Nepal, the chances of branding local products are very high. Nepali people are very much habituated to consume Nepali food and drinks trend and young entrepreneurs can establish Nepali brands of that sector. The typical Nepali style goods are also making their brands .</p>
<p>
	<strong>Price Hike Impact&nbsp;</strong></p>
<p>
	It is an interesting fact that in Nepal, despite the frequent price hike of Fast-moving Consumers Goods (FMCG), the market has not seen a drop in the demand of such goods. This indicates that consumers have got the capacity and are willing to pay more for the products of their choice of consumption.</p>',
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			'created' => '2013-05-22',
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			'keywords' => 'Young Consumers Have Smart Perspective On How To Spend Money, Cover story, New Business Age, May 2013',
			'description' => 'Entrepreneurship is something that will help the country to achieve sustainable development.',
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	(int) 6 => array(
		'Article' => array(
			'id' => '998',
			'article_category_id' => '40',
			'title' => 'When You Build Your Own Brand You Are Able To Command A Premium Rate',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong><span style="font-size: 12px;">Joydeb Chakravarty</span></strong></address>
<address>
	<strong>Managing Director</strong></address>
<address>
	<strong>JWT-Thompson Nepal</strong></address>
<p></p>
<p>
	<strong style="font-size: 12px;">Excerpts:</strong></p>
<p>
	<strong style="font-size: 12px;">Some experts say that Nepal is still an untapped and unexplored market. Do you agree?</strong></p>
<p>
	Nepal was first country in the region to be exposed to international brands. Some 30 years back, India did not have the access and exposure to the brands that were here in Nepal. Nepali consumers have always been exposed to these kinds of international brands for last 30-40 years. So, when local brands try to enter this market they find it a challenge because consumers benchmark it with international brands that they have already used. It could be in any category, but the consumers give it a fair trial and if it does not meet their expectations then they have no hesitation in rejecting it. The Nepali consumers are very discerning indeed!</p>
<p>
	<strong>Can you please tell us some major differences in the consumers’ behavior in the past and present?</strong></p>
<p>
	Today the consumers have a different kind of exposure because of the reach and penetration of the international media. This has had very large impact to the consumers’ psyche. When you look at the way people dress, we see they are following the world’s leading trends. Nepali consumers’ tastes and trends have evolved over the last couple of decades. Look at the way they have embraced new technology, new gadgets and even smart phones. Look at two wheeler sector, earlier people went for something functional but not anymore. Now they want a higher-end bike to go with their perceived self-image. People have a much higher level of aspiration now, and want to show that through their material possession.&nbsp;</p>
<p>
	<strong>What are the practices of the companies regarding study of consumers’ buying behavior in Nepal?</strong></p>
<p>
	Client and organizations in Nepal are talking about research. Although, they might not always employ a professional research agency, they might want to do research in-house, through their own team, which is not the right way to do it, but it still goes some way. Earlier there a few companies who actually believed in market and consumer research but that’s changed. We now see that clients and companies are talking about research, which is a very positive sign.</p>
<p>
	<strong>How is the branding practice in Nepal? How important is branding from your perspective?</strong></p>
<p>
	Branding has caught on over the last two decades. Everything now seems to be branded. I am just not talking about the consumer goods, but commodities which at one time were sold loosely are now branded. Companies have now come to realize and appreciate that when you build your own brand you are able to command a premium rate.</p>
<p>
	<strong>What is the media consumption habit of Nepali consumers right now?</strong></p>
<p>
	If you see the ownership in the durables likes colour television (63% in 2012 Vs 13% in 2003), radio, refrigerator and mobile phones have drastically increased. Ten years back the national media was primarily radio based but today there are more people watching television than listening to the radio. Obviously radio has not been able to catch the imagination the listeners, while television has caught on despite having more than 350 FM radio channels in Nepal. The print too have taken its toll, readership has gone down over the last ten years even though literacy has gone up. The reason could be the high cover price of newspapers. The usage of the internet has gone up drastically from 2% in 2002 to more than 25% in 2012.&nbsp;</p>
<p>
	<strong>How do you envisage the importance of advertisement to catch the emotional side of consumers?</strong></p>
<p>
	If you are unable to connect with your customers on an emotional level, you will not be able to engage with them meaningfully. Consumers today have many interests and they are not waiting to see your advertisements! Unless you are able to make an emotional connection with your customers; make your advertisements distinctive, emotional, entertaining and engaging otherwise you cannot hope to catch their attention.</p>
<p>
	<strong>What are the contributing factors in the quality of advertisements? What are the reasons behind low quality of advertisement in Nepal?&nbsp;</strong></p>
<p>
	Over the last few years the quality of advertisements has not matched the expectation of the Nepali consumers. &nbsp;There are many reasons for that, no one wants to take a ‘risk’ and everyone wants to ‘play safe’. Companies feel that if they come up with a “creative” advertisement it might go over the head of their audience. There is very little the advertising agencies can do in that kind of a scenario. This is also compounded by the severe shortage of creative people in the advertising sector. Moreover, top quality advertising production – especially films cost huge amounts of money. The market here is very small compared to other countries&nbsp;<span style="font-size: 12px;">in the region.&nbsp;</span></p>',
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			'description' => 'Nepal was first country in the region to be exposed to international brands. Some 30 years back, India did not have the access and exposure to the brands that were here in Nepal. Nepali consumers have always been exposed to these kinds of international brands for last 30-40 years.',
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		'Article' => array(
			'id' => '947',
			'article_category_id' => '40',
			'title' => 'New Year Hues: Products, Promises And People',
			'sub_title' => '',
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			'content' => '<p>
	<strong>By Siromani Dhungana<br />
	<br />
	<br />
	<br />
	New Year Hues: Products, Promises and People</strong><br />
	<br />
	Outlets of the world&rsquo;s most famous brands have already started doing their business in Kathmandu providing consumers chances of more choices and selections. The powerful combination of sophistication in use of goods, changing lifestyle in the urban area and consumers&rsquo; access to information created by information and technology have brought about an unprecedented shift in the consumers&rsquo; brand use habit. On the other hand, it has created both opportunities and challenges for companies looking for potential buyers. Increased competition among various players has compelled them to lure customers by offering different packages. New Business Age tries to catch-up some existing market phenomenon in Nepal and explores the connection between products and people in the market.<br />
	<br />
	The fastest-growing middle and upper middle-class consumers have created many opportunities for companies in the Nepali market. Earning enough to afford quality brands and quality consumer experiences, the younger generation has become brand-focused and up to date with the latest arrivals. From gadgets, clothing and watches to other personal belongings, the new generation has become brand conscious and choosy.<br />
	&nbsp;<br />
	On the other hand, the increasing competition among different brands has forced companies to lure potential consumers by offering attractive packages. Various companies have been trying to lure consumers using various techniques including bumper offers, appointment of brand ambassadors, advertising campaigns in the media and other packages to ensure the success of their brands. Private business houses have been aggressively putting their effort to get a hold in the market, opines young entrepreneur Meele Shrestha of Maxlee Traders Pvt Ltd. New Year 2070 may not witness a drastic change in the market but it can create a different type of vibration, she adds.<br />
	<br />
	<br />
	<img alt="products" src="/userfiles/images/2070-1.jpg" style="margin: 10px; width: 400px; height: 280px;" /><br />
	<br />
	<strong>Marketing of Products</strong><br />
	<br />
	Marketers always think that if they want a product to catch on, they have to think up a catchy slogan or come up with a slick advertisement to create a buzz. It is really impossible to exactly assess what propels consumers to buy particular products.<br />
	<br />
	Advertising campaigns are not enough. Companies should also think about linking products to the environment and let the environment do the work besides the advertisement and other ways of publicity of products.Consumers&rsquo; behaviour is strongly influenced by subtle environmental cues. In Nepal, most consumers want to follow the wealthy population in terms of products consumption and buying. Availability, price structure and quality of products largely determine whether the product can hold the market.<br />
	<br />
	<br />
	<strong>Consumers&rsquo; Psychology</strong><br />
	<br />
	Even big companies around the world cannot always predict consumers&rsquo; psychology correctly. Sometimes, a simple product can create a trend in the market but other times even meticulously designed and decorated product may fail to attract consumers.<br />
	<br />
	Consumers&rsquo; decisions on products are driven largly by implicit associations with the imagery connected to a brand. And, sometimes their decision may be associated with the subconscious emotional appeal of products. Why and how people buy some products and not others? Consumers&rsquo; psychology is a specialty area that studies how our thoughts, beliefs, feelings and perceptions influence how we buy and how we relate to goods and services.<br />
	<br />
	<img alt="nepali market" src="/userfiles/images/2070-2.jpg" style="width: 400px; height: 266px; margin: 10px;" /><br />
	<br />
	<strong>Diversifying Nepali Market</strong><br />
	<br />
	Markets of various products and brands have a tremendous potential to expand in Nepal. The modern marketing approach is a post 1990 phenomenon, a large section of people is still out of the the modern market system leaving room for new and innovative companies to expand their presence. And that is happening too.<br />
	<br />
	Kathmandu has many outlets and high-end streets to showcase state-of-the-art brands of various products. The trend of opening modern outlets outside the Kathmandu valley is on the rise. Pokhara, Biratnagar, Dharan, Itahari, Birgunj among others are slowly waking up to the modern marketing approach.<br />
	<br />
	The population of Nepal as of June 22, 2011 stands at 26.49 million showing a population growth rate of 1.35 per annum, according to Central Bureau of Statistics. According to the Nepal Demographic and Health Survey, a total of 40 per cent of people are below 15 years of age and another 30 percent are between 15-49 years of age. Clearly, the country has a huge potential for products and brands. because of the large youth population.<br />
	<br />
	All companies need to win the hearts and minds of the consumers to get a foothold in the market. In this issue, New Business Age presents a consumer-focused story looking at various products and brands and they promises to the consumers for the New Year 2070 BS. It also looks at the preferences and opinions of some consumers from various segments of society:<br />
	<br />
	<br />
	<br />
	<strong>Automobile</strong><br />
	<br />
	Nepal has seen the penetration of two- and four-wheelers increase at a rapid pace, thanks to the expansion of road connectivity and increased income of citizens. Expansions of roads throughout the country and a steep rise in the number of migrant workers have played a catalytic role in the growth of automobile sales. So, many automobile brands have been able to establish themselves and automobile has become one of the largest customs duty contributors in the country. Nepali consumers have been using four-wheelers ranging from the most expensive one to the cheapest Nano car. Similarly, Nepal-assembled brands such as Mustang and Sherpa have also been rolling on the Nepali roads.<br />
	<br />
	In fact, the automobile market is all set to open a new avenue in the country. New Business Age has talked with highly popular automobile brands, Volkswagen and Honda, regarding their business prospects in Nepal (keeping the Nepali New Year 2070 BS in mind.)<br />
	<br />
	<br />
	<img alt="watch" src="/userfiles/images/watch.jpg" style="width: 400px; height: 248px; margin: 10px;" /><br />
	<br />
	<strong>Watches and Clocks</strong><br />
	<br />
	The Global Industry Analysts (GIA), Inc predicts that the global market for Watches and Clocks is poised to reach US$46.6 billion and US$5.4 billion, respectively, by the year 2017. In a report &lsquo;Watches and Clocks &ndash; a Global Strategic Business Report&rsquo; released last year, GIA has concluded that the recuperation in demand for luxury watches post recession, robust demand from developing markets especially the Asia-Pacific and rising popularity of fashionable, vintage and innovative models are forecast to drive market growth.<br />
	<br />
	The Nepali market for watches and clocks has been ballooning, say traders. Around 50,000 pieces of branded watches are sold every year in Nepal, according to them. Globally famous watch brands have already started their business in Nepal and are doing well. On the occasion of New Year, New Business Age has approached some top watch brands in the Nepali market. Most famous brands available in Nepal such as Rolex, Rado, Tag Heuer, Omega, Titanic and Esprit will focuse on advertising to attract consumers in the New Year, according to their authorised distributer in Nepal.<br />
	<br />
	<img alt="mobile" src="/userfiles/images/2070-6.jpg" style="width: 400px; height: 269px; margin: 10px;" /><br />
	<strong>Mobile</strong><br />
	<br />
	According to the latest data made available by Nepal Telecommunications Authority (NTA), Nepal&rsquo;s telephone penetration rate reached 70 per cent in mid- December 2012. The mobile handset market will go hand in hand with the mobile penetration rate and the trade in hand-held terminals that<br />
	&nbsp;<br />
	have increased significantly in the last couple of years. The annual transaction of mobile sets in the Nepali market stands at around Rs 13 billion, says president of Mobile Traders Association of Nepal, Purushottam Basnet.<br />
	<br />
	The cheaper series of android phones has created an &lsquo;android revolution&rsquo; in the country, he opines, adding that a mobile set was considered as a sophisticated personal belonging until not long ago, but it has now become an essential commodity.It is obvious the customers who the companies should always take care of, authorised sellers of mobile sets say. According to them, no special package has been developed so far focusing on Nepali New Year but consumers will definitely benefit due to increased competition and presence of many popular brands in the mobile market.<br />
	<br />
	<br />
	<img alt="wear/fashion" src="/userfiles/images/2070-8.jpg" style="margin: 10px;" /><br />
	<strong>Wear/Fashion</strong><br />
	<br />
	The young generation is &lsquo;fashionable&rsquo; and choosy. This generation also tends to emphasize brand value in their spending.It is very smart to follow the latest trends and embrace innovative fashion design. Today, those who can&rsquo;t afford a particular brand, would wait until they can.<br />
	<br />
	Fashion in Nepal is a fast growing industry with increasing events such as fashion weeks or beauty peasants. Now a days, many world famous brands are available in the Nepali market. Lee, Levis, Springwood, Northface, Jeanswest, Pashmina and others brands have succeeded to win the hearts and minds of Nepali consumers in the dress and fashion regime. However, some local designers, too, have made their presence felt.<br />
	<br />
	Dress and fashion-lovers in the town will have reason to cheer in the Nepali New Year because most of the dress brands and outlets are going to offer discount schemes or other packages. But it takes time to know the nature of the offers because brands do not want to reveal their special package in advance, because of competition.<br />
	<br />
	<br />
	&nbsp;<img alt="cosmetic" src="/userfiles/images/2070-11.jpg" style="width: 400px; height: 314px; margin: 10px;" /><br />
	<strong>Cosmetics</strong><br />
	<br />
	The country&rsquo;s cosmetics market has witnessed a rapid growth over the last couple of years. With each passing year, the availability of cosmetic products has increased significantly and the consumption rate has soared. There is no dearth of the world&rsquo;s leading cosmetic brands in the local market. Whatever you want, the market has it. Traders estimate that the country&rsquo;s cosmetic market is worth more than Rs 15 billion annually, and it is growing at the rate of 25-30 percent.<br />
	<br />
	A growing middle class and rising awareness about personal image and hygiene, which has resulted in greater spending on beauty and personal care products, has played a very constructive role on the rise of demand for cosmetic items. From globally recognized brands like Lakme, L&rsquo;Oreal, Garnier, VLCC and Emami to others like Mac&rsquo;s Lavera, Nova, Chase, Astaberry, Lotus and Ayur, the domestic market at current features around 80 brands of cosmetic products. The market is showing continuous growth, says Adhiti Adhikari of Laavanya brand.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>Airlines</strong><br />
	<br />
	Nepal saw a significant growth in air transport after the aviation policy was liberalised in 1992. The annual passenger movement reached around three million in 2012. According to Civil Aviation Authority of Nepal (CAAN), 31 international airlines are operating in Nepal. Similarly, 15 domestic companies, including nine fixed-wing and six helicopter companies, are also in operation.<br />
	<br />
	The prospects look bright with the private sector playing a leading role and investing billions in the industry. Buddha Air and Yeti Airlines have successfully proved their salt in the domestic market while internationally acclaimed companies such as Oman Air, Qatar Air, Jet Airways and Thai Air -- to name a few -- have also served the Nepali travellers well. Domestic airlines are all set to introduce some special packages to customers, international companies will also bring special offers targeting the Nepali New Year. For the time being, keep on guessing what offers domestic and international airlines may bring to attract travelers.<br />
	<br />
	<br />
	<img alt="liquor" height="312" src="/userfiles/images/2070-15.jpg" style="margin: 10px;" width="176" /><br />
	<br />
	<br />
	<strong>Liquor</strong><br />
	<br />
	There is a huge market for alcohol . The demand has been increasing each year due to the rise in household income, which comes from remittance inflows. There have been instances in some districts where most of the remitted money was spent on imported, high premium liquor.<br />
	<br />
	Both domestic and international brands have been doing their business in the Nepali market. Liquor is also a major source of revenue in the country. The overall business of restaurant and bar has decreased due to Mapase (a campaign against drunk-drive launched by Division of Metropolitan Traffic Police); but liquor business is still one of the evergreen sectors in the country.<br />
	<br />
	People had mostly negative perception about liquor in the Nepali society until some years ago. This perception has changed now and alcohol has become a part of daily life now. Whether it is a gathering or a grand party, it is not considered complete without liquor.<br />
	<br />
	Some famous liquor brands such as Antiquity, Ballentine, Royal Stag and Signature have already won the trust of middle class consumers. World-class brands such as Red Label, Black Label and Chivas Regal have also been doing good business in the Nepali market. It is for sure that many of us will be celebrating the occasion sipping of liquor according of our choice.<br />
	<br />
	<br />
	<strong><img alt="paints" height="231" src="/userfiles/images/2070-19.jpg" style="margin: 10px;" width="250" /><br />
	Paints</strong><br />
	<br />
	The paint market has thrived over the years, creating much space for paint companies to expand their market in the country. Rapid urbanisation, construction boom and growing awareness among customers have triggered the demand of paints, giving a leg up to the domestic paint industry, mostly joint ventures and subsidiaries of Indian multinational companies.<br />
	<br />
	The annual domestic demand for paints (including decorative and industrial categories) currently stands at around 40,000 metric tonnes, according to industry sources. The data released by Nepal Rastra Bank, there was a turnover of around Rs 4.10 billion in fiscal year 2011-12.<br />
	<br />
	Despite the slowed demand in the recent days due to recession in the construction sector, m a n u f a c t u r e r s observe that the market is growing. Demand of paint will never go down because a fresh coat of paint is always required even in old houses and people want to change the &nbsp;<br />
	colour to give a different look to their apartments and rooms.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>Housing</strong><br />
	<br />
	Nepal&rsquo;s real estate sector has been in an ailing state for three years now. The real estate and housing industry witnessed a speedy growth (which many say was an unnatural growth) until the Nepal Rastra Bank (NRB), regulator of the country&rsquo;s financial market, suddenly restricted banks&rsquo; lending to the sector in September 2010.<br />
	<br />
	The government planned to purchase houses and apartments for senior civil servants last year. The decision, could give a new lease of life to the cash strapped housing sector, is moving at a snail&rsquo;s pace. However, some positive indication of growth has been seen in the realty sector from the beginning of this year. According to real estate entrepreneurs and housing developers, this business has grown by 33 per cent in the first half of the current fiscal year, compared to the same period in the previous year.<br />
	<br />
	The New Year is expected to bring new hopes and new enthusiasm to the realty sector, opines secretary at Nepal Land ad Housing Developers Association (NLHDA), Bhesh Raj Lohani.<br />
	<br />
	<br />
	<strong>Computers</strong><br />
	<br />
	A study carried out by the Computer Association of Nepal (CAN) last year showed that the computer penetration rate in the country had crossed five per cent. The survey was carried out based on the record of import of computer monitors and branded laptops, according to CAN general secretary Narayan Neupane.The penetration rate at present may have crossed eight percent, he says, adding that the trend of using computers is on the rise since schools, health institutions, clubs and other social groups in the far-flung areas of the country have started using computers for their day-to-day activities.<br />
	<br />
	It is likely that the transaction of overall ICT products will double in the next few years. Internet penetration rate increased to around 23 per cent till mid- December, and the rise of Internet users will have a direct impact on the trade of computers, he claims. High competition among world class brands including HP, Dell, Asus, Compaq, MAC, Sony, Lenovo and Acer have not only contributed to lower the price, due to hard competition, but also have provided quality products to Nepali customers.<br />
	<br />
	&nbsp;</p>
<p>
	&nbsp;</p>
<p>
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;New Year is Definitely a High Season for Passenger Cars&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="sarik" src="/userfiles/images/SARIK.jpg" style="width: 150px; height: 144px; margin: 10px;" /><br />
	SARIK BOGATI<br />
	<br />
	Head of Marketing, Pooja International (authorised distributer of Volkswagen)</strong><br />
	<br />
	<br />
	<strong>Can you please tell us briefly the overall business scenario of your product in the first quarter of 2013?</strong><br />
	<br />
	The year 2013 seems to be very lucky for Pooja International and the automotive division of Vishal group. Talking about the Volkswagen Brand, we have very good starting with arrivals of fresh 2013 models of Polo and Vento from India. There are many updates in the features like bluetooth in steering control, auto Aircon in Polo, increased leg room, introduction of new colours in cars, new alloys and black headlamps. We have started receiving the New Tiguan, Golf and New Touareg, which are also catching up the market. As a corporate strategy, the automotive division of Vishal Group has expanded its wing in a new segment with acquirement of dealership of &lsquo;Kobelco&rsquo; construction equipment in February 2013.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter, i.e., April- June, 2013 as the Nepali New Year sets in?</strong><br />
	<br />
	New Year and spring season is definitely high seasons for passenger cars. We have so many bankers in queue waiting to upgrade to Volkswagen in this season. Moreover, we will have more cars coming in this quarter from both Germany and India. Now, we can supply the cars to the customers who have been booking and waiting for months. We are very hopeful of the next quarter.<br />
	<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are the main features of your products/brands?</strong><br />
	<br />
	Kobelco construction equipment definitely is an exciting brand and has amazing performance machines which we will offer this year. Moreover, we are expecting some new models and facelifts of Volkswagen coming from India this year.<br />
	<br />
	<br />
	<strong>Can you please provide the price ranges?</strong><br />
	<br />
	We really can&rsquo;t say the price now. But the price would be similar range at what we are offering now.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular especially in the next month: April (Baisakh)?</strong><br />
	<br />
	We would be more focused on branding.</p>
<p>
	&nbsp;</p>
<p>
	&nbsp;</p>
<p>
	<br />
	<br />
	<strong>&lsquo;Toyota Starts to Book New Product Etios Targeting Nepali New Year&rsquo;<br />
	<br />
	<br />
	<img alt="" src="/userfiles/images/SAHARA.jpg" style="width: 150px; height: 151px; margin: 10px;" /><br />
	<br />
	SAHARA KC<br />
	Executive Divisional Manager<br />
	United Traders Syndicate (UTS)<br />
	(authorised dealer of Toyota in Nepal)</strong><br />
	<br />
	<br />
	<strong>Could you please tell briefly the overall business scenario of the produt/brand?</strong><br />
	<br />
	After a hugely successful business year, Toyota now is facing a mild slowdown in terms of sales, which can be ascribed to the recent economic crunch and inability of Toyota to meet the existing demand. The first quarter of this year is almost gone by in the anticipation of launching our new product Etios.<br />
	<br />
	<br />
	<strong>What are the expected returns within the next quarter?</strong><br />
	<br />
	The next quarter is expected to bring a boom in our business with the launch of our highly awaited product Etios. As the Nepali New Year approaches, we will be accepting bookings for the car. Looking at the large number of inquiries about the product, we are expecting a lot of bookings prior to the launch.<br />
	<br />
	<br />
	<img alt="sahara" src="/userfiles/images/sahara1.jpg" style="margin: 10px;" /><br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are the main features of your brands?</strong><br />
	<br />
	As of now, we do not have any new product offering for New Year but we are expecting sales of the product that we have in our offering. Avanza, Hilux, Fortuner, Corolla, Yaris are a few products that we expect to sell more.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular?</strong><br />
	<br />
	Apart from our regular promotional campaigns and promotions for Etios that we will begin from the next month, the launching of Etios will be something the city has never witnessed before. We are focused on making the event an eye catcher for not only our customers and prospects but for anyone who gets a mere glimpse of the event.<br />
	<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;December to January is Considered a Dull Period&rsquo;<br />
	<br />
	<br />
	<img alt="rahul" src="/userfiles/images/RAHUL.jpg" style="width: 150px; height: 143px; margin: 10px;" /><br />
	<br />
	RAHUL DHANUKA<br />
	Brand Manager<br />
	Esprit Watch</strong><br />
	<br />
	<br />
	&nbsp;<br />
	<strong>How do you see the possibility of the business in the next quarter?</strong><br />
	<br />
	With the Nepali New Year approaching, people will certainly start feeling the heat of summer. The watch business is likely to rise because of the change of season. People tend to spend more on watches in summer than in winter. Moreover, the New Year will bring festive mood back. So, people will spend comparatively more than in any other time of the year. We also have the latest collections in store, so watch lovers can try out new collections that will certainly match the latest trend and fashion.<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are main features of your products/ brands?</strong><br />
	<br />
	We have several brands available at all our outlets. Most recently launched brands are Esprit and Pierre Cardin. The brands trendy and casual models. Few most sought other products and brands are: Fossil and Kenith Cole.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of these brands?</strong><br />
	<br />
	The price ranges from Rs 10000 to Rs15000.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products popular in the next month?</strong><br />
	<br />
	We have three outlets for our products and all of them are located in prime areas like Durbar Marg, City Center and Blue Bird Mall. We are using different branding and promotional strategies. We mainly focus on the print media like different magazines, newspaper, hoarding boards, etc. We have also started targeting our customers through social media like Facebook and Twitter. Fan pages on facebook have helped us a great deal to attract young mass towards our products.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Today is What Technology Stays on, Tomorrow is Where it Moves Ahead&rsquo;</strong><br />
	&nbsp;</p>
<p>
	<img alt="sachin" src="/userfiles/images/SACHIN.jpg" style="width: 150px; height: 148px; margin: 10px;" /><br />
	<br />
	<strong>SACHIN UDAS<br />
	Marketing Manager, Teletalk (authorised distributer of Colors Mobile)</strong><br />
	<br />
	<br />
	<br />
	Colors is one of the most popular mobile set brands in the country. It has full ranges of mobile phones from basic level to touch-based lifestyle phones, along with CDMA and hi-end smartphones. Colors is a reliable brand with one year of warranty.Colors has the largest network with 18 service centres from East to West. Colors operates after-service follow-ups to assure customers are satisfied with the products.<br />
	<br />
	Colors brand believes in value transferring. We have four major series of Phone: Fighter, Lifestyle and Touch, CDMA and X-factor series. Fighter series consists bar phones with basic features, which can play MP3/ MP4. Fighter series is very popular all over the country. Lifestyle and Touch Series offers multi media facilities like touch screen. Colors&rsquo;s has introduced smartphones under X-factor series. In less than a year, the company has taken good market share of smartphones.We will have entry level android phones, which we want in every teen&rsquo;s hand so that they can explore different apps that are useful in learning languages and also for other purposes. We believe that the android is the key for Nepali teens to experience and explore possibilities of technology.<br />
	<br />
	Colors&rsquo;s X-factor tablets will be soon arriving to the market. It will come in 7 inch and 8 inch screen sizes with 3G SIM compatibility.&nbsp; Colors brand believes that today is what technology stays on, tomorrow is where it moves ahead.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;New Year is Expected to Bring New rays in Summer Sale&rsquo;<br />
	<br />
	<img alt="achal" src="/userfiles/images/ACHAL.jpg" style="width: 150px; height: 164px; margin: 10px;" /><br />
	ACHAL AGARWAL<br />
	Director<br />
	JeansWest, Nepal</strong><br />
	<br />
	<br />
	<br />
	<strong>Can you tell us briefly the overall business scenario of your products in the first quarter of 2013?</strong><br />
	<br />
	The overall business scenario was very exciting during the first quarter. It has been two years since we introduced our brand in Nepal and people have responded well to the product.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter as the Nepali New Year sets in?</strong><br />
	<br />
	We expect a good sale during April-June since it is summer and people come to buy summer goods.<br />
	<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are their main features?</strong><br />
	<br />
	We have lots of products including T-shirts, half shirts, quarter pants, pants and summer jeans (for men and women) in the New Year.<br />
	<br />
	The main features of our brand are:<br />
	<br />
	a. Company controlled prices: This has become one of the major factors behind our brand to be so successful within such a short span of time. Our products are almost 30 per cent less priced than the similar kind of goods in the market.<br />
	b. Quality: JeansWest is known for its quality in Australia and worldwide markets.<br />
	c. Brand: JeansWest is a very big brand of Australia and so people know about this brand making it very easy for us to get established in the market.<br />
	d. Variety: At JeansWest, we have a very wide range of products.<br />
	e. Size and Fit: JeansWest products have been received well in the Nepali market because of their sizes and fittings for Nepali people.<br />
	<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of the same?</strong><br />
	<br />
	Price ranges from Rs 990 to Rs 4000.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular in the New Year 2070 BS?</strong><br />
	<br />
	Paper media and hoarding boards will be our main marketing strategies in the New Year.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Customer Satisfaction is a Must to Make Products Popular and Desirable&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="dilip" src="/userfiles/images/DILIP.jpg" style="width: 150px; height: 168px; margin: 10px;" /><br />
	DILIP KC<br />
	Sports Plaza Pvt Ltd<br />
	(Authorised distributer of Reebok, Rockport and Lee brands)</strong><br />
	<br />
	<br />
	<br />
	&nbsp;<br />
	<strong>Could you please tell us briefly the overall business scenario of products in the first quarter of 2013?</strong><br />
	<br />
	Sports Plaza Pvt Ltd covers Reebok, Rockport and Lee brands, which are one of the best apparel and footwear brands in the world. January 2013 sets in with winter at its peak and as the brand covers an entire range of winter apparels, footwear and accessories, we do not need to worry much about sales and acceptance of our products by our customers. These are world class products with the best designers putting in latest trends in fashion and comfort. They also involve new technologies in footwear and even in fabrics, not available in general.<br />
	<br />
	<br />
	<strong>How do you see the possibility of the business in the next quarter as the Nepali New Year sets in?</strong><br />
	<br />
	We are very optimistic about the business in the next quarter, when we will put our summer arrivals on display, welcoming spring summer with latest and the best in designs and the quality fabrics best suited for our customers. The lightweight footwear and air flow technologies are ultimate in comfort and style. We are sure of high sales volumes in spite of tough competition from other brands.<br />
	<br />
	<br />
	<strong>What are the main features of your products?</strong><br />
	<br />
	As already mentioned, Reebok is a premium sports brand always putting in highest standards of quality and workmanship, both on their footwear and sports apparels. The main features are light weight and best quality fabrics available in the industry with the latest technologies that goes into making them. To mention a few, the fabrics are play dry, which keep our body cool even in peak summer, zig fabrics which are proven to give back the energy dissipated from the body during workouts and exercising and the easy tone range &ndash; helping to tone the body muscles.<br />
	<br />
	Rockport is a trendy leather footwear range for men offering great style and comfort. Also the high technologies that go into Leather processing, The sole, and the workmanship required to make them. Lee is a casual fashion brand with best Denims and cottons available in the market. The designs, quality and price range has been well accepted in the market.<br />
	<br />
	<br />
	<br />
	<strong>Can you please provide the price ranges?</strong><br />
	<br />
	As there are many varieties of products, it would not be possible to cover the prices on this short space. However, if you want prices for some specific product range, we shall be glad to provide the same.<br />
	<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular?</strong><br />
	<br />
	We strongly believe that our customers&rsquo; satisfaction is the most desired strategy that would make our products popular and desirable. However, we can never undervalue the great cooperation and good wishes of our media friends from all publishing houses and advertising agencies, who have worked hard making great designs and offering us the best coverage available.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;We Want to Strengthen Laavanya Brand in the Coming Year&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="aditi" src="/userfiles/images/ADITI.jpg" style="width: 150px; height: 143px; margin: 10px;" /><br />
	ADITI BHATTARAI<br />
	Business Development Manager Laavanya Luxury Ayurveda</strong><br />
	<br />
	<br />
	<strong>Can you tell us briefly the overall business scenario of your brand in the first quarter of 2013?</strong><br />
	<br />
	This quarter has been significant for the company as we celebrated our first anniversary in February along with the commercial launch of our sales in the United States. This event has reinforced the strength of Laavanya as both national and international brand. We want to build on this perception and strengthen the brand further for the year.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter, i.e., April- June, 2013 as the Nepali New Year sets in?</strong><br />
	<br />
	April to June is a special season for all our products because we have special events like New Year and wedding season of Baisakh and Asadh. Our products make great gifts for occasions like these. Our cleansing products like the Royal Saffron Ubtan (known as Bukuwa in Nepali) have special significance on wedding rituals and can be used by the brides (and their families) for beautifying as well as religious purposes. Last year, this period brought us the best sales and business prospects in the entire year.<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are their main features?</strong><br />
	<br />
	Taking the season into consideration, we will be promoting our cleanser, face mask and moisturizers this quarter. The cleanser (Royal Saffron Ubtan) and Face Mask (Mukha Kantibarkdhak Powder) are designed for all skin types and are beneficial in windy season, especially in Kathmandu where the effects of dirt from the street impact the skin directly. These products gently remove dirt particles and leftover make up, can be used daily.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of those products?</strong><br />
	<br />
	Royal Saffron Ubtan-Rs 1250<br />
	Mukha Kantibardhak Powder-Rs 1250<br />
	Radiance Cream-Rs 1650<br />
	Deep Nourishing Cream-Rs 1950<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular especially in the next month?</strong><br />
	<br />
	We mostly focused on personal selling and word-of-mouth publicity this past year. In this quarter, we will be focusing on advertising through the print media and social media. We have used social media effectively in conveying the benefits of Ayurveda and our products and how and when to use them, we want to give continuity to that. We will also offer a special discount offer for New Year.<br />
	<br />
	&nbsp;</p>
<p>
	<br />
	<strong>&lsquo;Overall Business scenario is Good in the First Half of the Current FY&rsquo;</strong></p>
<p>
	&nbsp;</p>
<p>
	<img alt="bhesh raj lohani" src="/userfiles/images/bhesraj.jpg" style="width: 150px; height: 167px; margin: 10px;" /><br />
	<strong>BHESH RAJ LOHANI<br />
	Managing Director<br />
	Green Hill City Pvt Ltd</strong><br />
	<br />
	<br />
	<br />
	<strong>How is overall business of housing sector?</strong><br />
	<br />
	Green Hill City is the largest housing industry in Nepal. It will be developing around 800 units in 320 ropanies of land. As regarding the overall business scenario the product sellings are quite good in the first half of the current fiscal year. Out of 490 units constructed by the company, 130 units have been sold and ownership of 96 units had already been transferred.<br />
	<br />
	<br />
	<strong>What are the main features of Green Hill City&rsquo;s products?</strong><br />
	<br />
	We have two different products: acquiring land and constructing houses by consumers themselves and purchasing completed houses. Green Hill City is committed to providing quality services and best housing products to its customers. We have targeted all types of consumers ranging from the middle class to the upper class.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges?</strong><br />
	<br />
	The price of housing units and colonies constructed by Green Hill City ranges from Rs 6.7 million to 30 million.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular?</strong><br />
	<br />
	Till date we have been promoting our publicity strategies through newspaper advertisements, TV promos and hoarding board. The next campaign consist of a number of sales executive going the various corporate house providing the information about the products through direct marketing by the help of brochure and flyers.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Nerolac Produces Many Ranges of Products&rsquo;</strong></p>
<p>
	&nbsp;</p>
<p>
	<br />
	<img alt="rajendra" src="/userfiles/images/rajendra.jpg" style="width: 150px; height: 232px; margin: 10px;" /><br />
	<strong>RAJENDRA DESAI<br />
	Country Head<br />
	Nerolac Paints</strong><br />
	<br />
	<br />
	Considering the market&rsquo;s feedback, the paint market is opening and the season is starting after the winter. Cold weather is almost gone and we see a bright sun every day, which will help to increase the sales of paints and allied products. The construction activities are in full swing, these means an increased demands of paints. Paint sales in the first quarter will be much higher than in the last quarter, and it is expected that the trend will continue in the coming months. We will have 3 per cent more than last year. We have started producing various ranges of Nerolac products, along with existing range of Nepal Shalimar brands. We are keen to market super premium products both for exterior and interior use.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;ICT Market is Always Looking to Give Better and more Suitable technology&rsquo;<br />
	<br />
	<br />
	<img alt="" src="/userfiles/images/nabin.jpg" style="width: 150px; height: 160px; margin: 10px;" /><br />
	NABIN JOSHI<br />
	Assistant General Manager<br />
	Astral Computers Nepal Pvt Ltd</strong><br />
	<br />
	<br />
	<strong>Can you please tell briefly the overall business scenario of the ICT products in the first quarter of 2013?</strong><br />
	<br />
	The first three months seem good in terms of business prospects. Because the CAN InfoTech 2013 was held in the same quarter, the promotion of IT business was better compared to previous quarters. Due to CAN InfoTech, we were able to reach the end user as well as corporate customers. Therefore overall business scenario of ICT products looks bright.<br />
	<br />
	<br />
	<strong>How do you see the possibility of the business in the next quarter?</strong><br />
	<br />
	Along with consumers&rsquo; positive perception, ICT sector needs favorable and appropriate policies to grow. Despite of all above causes, the purchasing trend from organisations has increased. So, we are expecting the same situation, even with better possibilities in the next quarter.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make ICT products more popular?</strong><br />
	<br />
	Nepal&rsquo;s IT market is price driven. However, ICT products do not adapt to a single strategy for better publicity.<br />
	Apart from price, we also educate customers and suggest them the right product to enhance the productivity. Educating customers means building long term relationships, which enables to win their trust. In order to get more publicity about our products, we are trying to reach more and more customers, listening to their requirements and suggesting them the best option.<br />
	<br />
	<br />
	&nbsp;</p>',
			'published' => true,
			'created' => '2013-04-17',
			'modified' => '2013-07-28',
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			'description' => 'Outlets of the world’s most famous brands have already started doing their business in Kathmandu providing consumers chances of more choices and selections. The powerful combination of sophistication in use of goods, changing lifestyle in the urban area and consumers’ access to information created by information and technology have brought about an unprecedented shift in the consumers’ brand use habit.',
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	(int) 8 => array(
		'Article' => array(
			'id' => '896',
			'article_category_id' => '40',
			'title' => '‘We Need To Develop Our E-commerce First’',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong><img align="right" alt="Sanjay Golchha, Golchha Organization" height="313" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_sanjay.jpg" style="margin:0 0 0 10px;" width="274" /><span style="color:#3ab0c4;"><span style="font-size: 22px;">'We need to develop e-commerce first'</span></span></strong></address>
<address>
	<strong><br />
	</strong></address>
<address>
	<strong>Sanjay Golchha</strong></address>
<address>
	<strong>Director</strong></address>
<address>
	<strong>Golchha Organization</strong></address>
<p>
	<strong style="text-align: justify;">What is an example of media convergence in Nepal due to the advent of new communication technologies?</strong></p>
<p style="text-align: justify;">
	Digital media is the most useful form of media for the advertisers. Online marketing has not been fully explored in Nepal. Although social media sites like Facebook have high usage in Nepal, advertisements on facebook are not very effective. Media convergence has only recently started making some impact. People do not understand the power of the digital media. Only international contents can be found in online ads, not the local content.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What has been the most useful communication technology convergence in the Nepali media?</strong></p>
<p style="text-align: justify;">
	To make use of communication technology in Nepal, e-commerce should develop first. It is not developing due to social and technical inefficiencies in Nepal. Online digital ads will be prominent on the Internet or on the websites only after we have a developed e-commerce business.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What has been the impact of media convergence on Nepal’s media industry?</strong></p>
<p style="text-align: justify;">
	The impact of media convergence will come slowly. This requires economic development and political stability in the country. This can provide a platform for the ecommerce businesses to develop more content. People are not using the online media to buy things online. Due to the poor financial situation of the country, people are not in a hurry to buy anything. They want to use their time to choose the products they want to buy. Another thing is, even if the people were interested in buying products online, the online payment system has not yet come into practice. Firstly, they cannot pay and secondly they cannot trust buying products online. Hence, there are many pending issues with regard to media convergence. First, the Nepali commerce and media industry should develop; the ads will follow later.&nbsp;</p>
<p style="text-align: justify;">
	<strong>How long shall it take to make a full impact?</strong></p>
<p style="text-align: justify;">
	The impact of media convergence can be seen soon. But, for this the Internet bandwidths should be cheaper and the Internet should be more accessible to the people. Online payment systems should also be developed and promoted. Due to the conservative financial system, online payment is difficult. Domestic payment systems should be prioritized and the international payment systems will automatically develop. The world is globalized today and lack of an online payment system is a major disadvantage to us. Businessmen should invest in e-commerce development. More pioneers are required. E-commerce websites like Thamel.com and Muncha.com are well established businesses. Airlines have also advanced in this sector. Buddha Air, Yeti Air and others as well have already started providing online reservation service to their customers.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What are the changes required in the media industry to adapt to the changes of media convergence?</strong></p>
<p style="text-align: justify;">
	They can also be explored for business development but this has not been done at all.&nbsp;</p>
<p style="text-align: justify;">
	If providing Internet on the phone brought a lot of profit to the mobile phone companies, then development of online payment system will be even more profitable. Nepal is a tourist destination. The tourism industry flourishes throughout the country. But, it is difficult for the tourists to learn more about Nepal before their visit. Tourism related websites are advertised in the international online media to attract tourists. However, when they want to make a hotel reservation to ensure that they already have a place to stay before visiting the country, it is not possible. Similarly, products like coffee and carpets that are exported abroad cannot be advertised properly. The major reason for this is the lack of an online payment system.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What can the advertisers do in order to benefit from the changes of media technology convergence?</strong></p>
<p style="text-align: justify;">
	We need to invest in e-commerce. This can help local businesses to reach customers around the world. Lack of an online payment system is a loss for tourism-dependent <strong>businesses like hotels and travel agencies as well as the exporters. The payment taking mechanism is difficult which is why the online advertising is not fully developing.</strong></p>
<div style="background:#fcf88d;padding:5px;">
	<p style="text-align: justify;">
		<strong>The Paradigm Shift</strong></p>
	<p style="text-align: justify;">
		There has also been a shift in terms of media’s target consumers. Traditionally, the primary market was the target of media companies. The primary market included television viewers, radio listeners, website surfers, and newspaper and magazine readers. While the secondary market includes the marketers, the competing companies and other media as well. There has been a convergence in these two groups as now they both are targeted equally by the media companies.&nbsp;</p>
	<p style="text-align: justify;">
		Sanjay Golchha is also involved with Mindshare Nepal, which is a digital marketing company, the first of its kind in Nepal. It is the authorized agent for GOOGLE in Nepal and works in close relation with the businesses companies of Nepal. They are involved in Search Engine Marketing (SEM), which is the biggest source of online advertisements. They are also focusing upon social engineering, advertising the tourism and travel websites as well as promoting export products online. Currently, their major focus is upon providing email-marketing services to the local businesses. &nbsp;Mindshare Nepal Pvt. Ltd. collaborates with two companies who are experts in Software (IT Nepal) and marketing (Linez). Email marketing allows the businesses to reach thousands of people with a single message and see their response instantly.&nbsp;</p>
</div>
<div>
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			'description' => 'The impact of media convergence can be seen soon. But, for this the Internet bandwidths should be cheaper and the Internet should be more accessible to the people.',
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		'Article' => array(
			'id' => '895',
			'article_category_id' => '40',
			'title' => '‘Companies Should Focus On Building Brands, Not On Selling Units’',
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			'content' => '<p>
	<strong><img alt="Abhaya Pandey" height="254" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_abhaya.jpg" width="250" /><br />
	</strong><strong>Abhaya Pandey</strong><strong>Advertising Professional</strong></p>
<p>
	 </p>
<p style="text-align: justify;">
	<strong>How is media convergence affecting Nepal’s advertising industry?</strong></p>
<p style="text-align: justify;">
	Online Media is an example of the impact of Media Convergence in Nepal but it has not been able to make a significant impact yet. There are very few Internet users. We are still relying on the digital media as the prominent source of advertisement. &nbsp;</p>
<p style="text-align: justify;">
	<strong>How has Social Media Education (SEM) changed over the years?</strong></p>
<p style="text-align: justify;">
	While social media education advertisements were mostly like BCC (Behaviour Change Consumerism) previously, today ad literacy has increased. This also requires more ad communication experts to convey social educational messages in an entertaining manner. The challenge today is not only giving information but also persuading consumers to buy the product or the message. While traditional media required information education, today information has to be conveyed through entertaining ads that can easily grab the people’s attention. Education is possible through entertainment only. Functional value is changing. Humour, fear campaigns, sensationalization etc should be embedded into ads to make them both entertaining and educational. Only educational ads will make people switch between TV channels. The government, NGOs and INGOs should be more responsible towards SME.</p>
<p style="text-align: justify;">
	<strong>How is the “Brand Personality” of a company reflected in its advertisements?&nbsp;</strong></p>
<p style="text-align: justify;">
	Sixty per cent of the total cement consumed in Nepal is produced in Nepal; only the remaining 40 per cent is imported. This clearly suggests a lack of competition in the domestic market. Many companies are trying to establish their brand names in the cement industry but special emphasis has not been placed in making better advertisements for those brands. The richest organizations of Nepal, the banks are limited to the urban areas and are yet to reach the villages. Hence, there is not much competition in the banking sector as well. Brands are classified in terms of the advertisements that they demand. Clients should think long-term. They should focus on building brands and not only on selling units. The market of instant noodles can be called competitive and this is reflected in &nbsp;their advertisements as well. People can easily associate more with the noodle brands than with others.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What is the biggest challenge in the advertisement sector today?</strong></p>
<p style="text-align: justify;">
	The biggest challenge for Nepali business companies is to use advertisements to grab the people’s attention first and then to convey the message of the brands. Some ads are very descriptive which makes them absurd instead of creative. This can lead to a disconnection between the brand message and the advertisement message. It’s only a tool. Ideas combined with technology are necessary to create better advertisements and awesome brand images. The market is changing from supply-oriented to demand-oriented. More competition and professionalism is required in the corporate houses. Only after these basics are met, the companies can focus on creativity and design of their brands. If the brands and production companies start focusing upon brand image today, they will be able to stand out even 25 years from now. Glossy ads are not always creative ads.</p>
<div style="text-align: justify;">
	 </div>',
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			'description' => 'Online Media is an example of the impact of Media Convergence in
Nepal but it has not been able to make a significant impact yet.  There are very few Internet users. We are still relying on the digital media as the prominent source of advertisement.',
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		'Article' => array(
			'id' => '894',
			'article_category_id' => '40',
			'title' => 'Media Convergence: Impact On Business',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	<span style="text-align: justify;">Media convergence is a theory, and subsequently a practice, in communications where every mass or niche medium eventually merges with each other to the point that they are indistinguishable from each other, creating a new medium from the synthesis, due to the advent of new communication technologies. With the advent of new medium over the Internet and the mobile, media convergence is now an increasing reality in the Nepali media and entertainment industry.&nbsp;</span></p>
<p style="text-align: justify;">
	A prominent example of media convergence in Nepal is the online media. It has had a significant impact upon the conventional print and broadcasting media. Globally, it has proved to be very influential. In the USA and other developed nations of the world, everyone uses advanced technologies such as &nbsp;iPhone, Blackberrys and other gadgets that help them stay updated every second. People do not wait for the next day to read the newspapers. The online news portals get updated every minute with new news flowing in. According to Suresh Prasad Aacharya, Academic Advisor at the Shepherd College of Media Technology, such an example can also be seen in Nepali radios. Radios provide news bulletins every hour. The same news is followed by the televisions and is viewed by the audience in the evening.&nbsp;</p>
<p style="text-align: justify;">
	The online portals also update the news. Next morning, almost the same news is printed in the newspapers. Again, the radios conduct programmes in they which repeat the same news they broadcast a day ago. Hence, a cycle of convergence can also be seen in Nepal as the news reports get reproduced again and again by various forms of media. This is beneficial to the media consumers as they can stay updated through various forms of media. But this process weakens the media houses. Reporters can also benefit from this cycle. Most of the print media located outside the valley use online sources for the news. &nbsp;</p>
<p style="text-align: justify;">
	<strong>Challenges in Convergence</strong></p>
<p style="text-align: justify;">
	While the industry at large is excited about media convergence, it also has its share of concerns. The unanimous one is the lack of adequate bandwidth. The bandwidth cost is too high and needs to be brought down drastically. In Nepal, Internet usage is very low. The fact that 18 per cent of the population uses the Internet is exaggerated. Hence, this makes it difficult for the media companies to use the Internet to communicate with their audience. Only 5-6 per cent Nepalis have been able to make effective use of the Internet. &nbsp;In Korea, there are half-a-million subscribers who receive 11 channels live on their mobiles. Only when there is enough bandwidth, can the business be ramped up.</p>
<p style="text-align: justify;">
	The other challenge is educating consumers to use the various new media. The latest technologies such as HD camera and the latest software are not being utilized to the full extent. &nbsp;Though we capture advertisements in HD (High Definition), it is shown in SD (Standard Definition). This has been making a little difference in quality but the full potential of technology remains unexplored. Consumers here have some access to the latest technological goods but consumer education for their proper usage is not being encouraged. The industry will not grow unless the consumer is educated and aware of the available technologies and their usage.</p>
<p style="text-align: justify;">
	Apart from reaching consumers at various touch-points through convergence of the media, companies are also looking at it as a media to cater to the individual needs of consumers. And for this, the need of the hour is to generate adequate content. The Nepali media lacks the competition to generate adequate content. Producers are not compelled to make better advertisements. Advertisements are reflections of the competition among the brands. The clients want only glossy ads. They have a conservative mentality, as they want to stay 125 per cent secure. They prefer traditional, tried and tested methods that are still selling. Bringing creativity in media and advertisements requires more courage and clients by nature want security. Content availability has not kept pace with the changing consumers. Content generators have to generate enough to cater to individual tastes.&nbsp;</p>
<p style="text-align: justify;">
	Another perspective to the challenges is the industry - one where companies need to be more and more competitive in their marketing and product strategies. For this, they need to constantly innovate new products and therefore, reallocate an increasing amount of resources to research and development. Looking at the TV commercials in Nepal, one can easily see the lack of competition to generate adequate content Most of the commercials are that of FMGC (Fast Moving Consumer Goods). These markets are somewhat competitive and thus they focus on generating enough content to attract their consumers. However, for the products with uncompetitive market, the need to make the extra effort is not felt. This can result in the lack of contents in media. As more companies compete, the gestation period for newer products also decreases with each product life cycle. Companies should not only concentrate on selling units but also on creating a brand image.</p>
<p style="text-align: justify;">
	Finally, the lack of multi-skilled professionals in the newer arenas of business makes it difficult for the company’s old guard to let go of draconian or obsolete practices. This ultimately leads to turf wars over domain control. Convergence along with technological advancements has brought a tough competition in the media market. However, the level of seriousness is still very low. Acharya shares, “There is stiff competition &nbsp;to be the first to give the news to the audience but the accuracy and credibility of the news is lacking.” The skill demanded by Media Convergence is not being provided. He further says, “A computer literate media person is not good enough. We are using computers as typewriters and to get access to news only. Modern forms of technology should be better utilized. More creativity can be presented by using them which is not being done”. Nepali media is not fully aware about media creativeness. “Media are aware but not serious because they use online media for their convenience right now but they are not making long term assessments,” he says. In a period of 10 years, only the fittest will survive. His only request to media editors and directors is that they should stay updated with latest trends in media through training or orientations. &nbsp;</p>
<p style="text-align: justify;">
	<strong>Market and Technology Convergence</strong></p>
<p style="text-align: justify;">
	By plotting time against portability and interactivity and at the same time, selected parameters that might be called the benchmarks of technology progress namely moving image, computing, voice communication and games, we can get a historical perspective as well as deduce where the combined technologies are headed.&nbsp;</p>
<p style="text-align: justify;">
	However, in this case of mapping, the word convergence is never intended to suggest replacement (i.e. not everything is moving to one entity or point). All of the elements on the charts are still in existence and, except for VHS and DVD, will be around for a good while. We also see ‘divergence’ of media forms as it morphs across a sea of devices that continue to grow, layer upon layer.&nbsp;</p>
<p style="text-align: justify;">
	All technology makers and marketers would like to know what the next will be. In the portable domain will we always have separate phone and serious gaming device? We are already seeing the merging of the phone, organiser and media player (4GB phones are already in the market) – given you can dock these portable devices to the larger screen, carry all your content and that they can receive high definition TV, do we need fixed devices at all?&nbsp;</p>
<p style="text-align: justify;">
	<strong>Technology Convergence in Nepal</strong></p>
<p style="text-align: justify;">
	iPhone can be used in Nepal but it cannot be fully utilized. The phone clearly denies the user an access to its online stores by saying that the service is not supported in the region. This is due to the lack of an online payment system. On the contrary, Nokia phones are developing local contents for Nepal. Microsoft also provides Nepali language fonts for usage. However, the customers can use only the free services and not the priced contents. This can result in slow usage of technologies also. The telecom companies should be involved in this business. Both Ncell and NTC are providing mobile Internet service. This helps the users to use more social entertainment sites and random online contents but making full use of the latest technological innovations is difficult. Ncell has come out as the market leader with its gorgeous advertisements and user-friendly services. However, the customers want more.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Convergence of Understanding, Practicing and Innovating</strong></p>
<p style="text-align: justify;">
	Increasingly, one can observe a definitive trend in the convergence of understanding, practicing and innovating in the competitive marketplace where each participant is eying the largest chunk of the pie. Understanding the needs of the consumer has taken on a new importance with extreme segmentation and fragmentation in the marketplace. Identifying this need and creating a new product or service to fill this gap has gained prime importance, more so akin to a rasion d’être for the companies. From high value-high involvement products like home loans and automobiles to low value-low involvement products like detergent powders and toothpastes to soft drinks, companies are increasingly spending huge amounts of money to understand the patterns and motivations of the consumers for selecting, purchasing and using a certain brand.&nbsp;</p>
<p style="text-align: justify;">
	Even more important, the brand association that the consumers make with a certain brand can make or break the brand equity of a company’s product and the difference between success and failure of the product in the market. A constant drive to innovate and come out with better products is reflected in the ever-increasing amounts of R&amp;D spending of the companies. For example, high technology products like Nokia’s mobile handsets are made based on a constant feedback on usage and understanding of mobile phones by the customers. This has led to the incorporation of higher levels of innovation and user-friendliness in the next handset made by Nokia.</p>
<p style="text-align: justify;">
	A new concept on the horizon is co-creating value. This happens between the consumer and the manufacturer. The manufacturer actively seeks the cooperation of the consumer for creating new products.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Convergence of Creativity/Design with Technology and Business Sense&nbsp;</strong></p>
<p style="text-align: justify;">
	It wasn’t a long time ago when even the top copysmiths of advertising like Neil French used to write copy for ads and fit them in typesets for printing. Nowadays, even a copywriter in a small agency in a small town will type out the copy quickly on the computer and the graphic designer will fit it into the ad’s layout and send out the soft copy to the newspaper for printing. Technology innovation from typewriters to computers has made this shift possible. A school student with a typical Pentium desktop computer has, at his disposal, more computing power than NASA had when it sent the first man to the moon. The great enabler in this case, technology, is progressing with such rapid pace that the latest, most cutting-edge technology is rendered almost outdated within a few months of its release. Creative visualisers using advanced software like Adobe Photoshop and CorelDraw are daily creating breathtaking graphical masterpieces that would have taken even a Leonardo da Vinci months, if not years, to create.</p>
<p style="text-align: justify;">
	Convergence in technological standards like image formats (jpegs, gifs, etc.), audio-video formats (mpeg, avi, etc.), audio formats (mp3, wma, etc.), and so on, combined with interpolability and compatibility to use, share and transfer this data (USB, flash drives, DVDs and other optical storage) has created a powerful technology-design combo that professionals across the world are using in physical form as well as virtual form (cyberspace – Internet). Add to this, the keen entrepreneurial mind of a businessman and you have technology monoliths like the Times Group and others like AOL-Warner, Sony and Apple amongst many others who dominate the commercial landscape. Convergence is changing the way people live their lives on a daily basis.&nbsp;</p>
<div style="text-align: justify;">
	<div>
		<strong>Convergence of Classroom (Brick &amp; Mortar) with Internet (Click &amp; Portal) and Learning by Doing (Experiential): Experiential Brick and Portal&nbsp;</strong></div>
	<div>
		 </div>
	<div>
		<img alt="Midas EClass" height="86" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_midas_class.jpg" width="217" /></div>
	<div>
		Traditional classroom model has been in an evolutionary phase ever since technology innovations have made networking possible. Satellite communications like VSAT have enabled hundreds of thousands of students across the world to virtually attend lectures. The University Grants Commission (UGC) has empowered students in India because of this education and technology convergence. In professional courses, the emphasis has always been on practical knowledge rather than just theoretical inputs. The value addition to the professional skills development is far more when students are exposed to theories and their practical applications. Added to this is the new dimension of Internet learning. Numerous universities, colleges and institutes, especially in Western Europe and North America, are now offering degree courses through the Internet. This dissolves all cultural, geographical and social barriers for people who cannot afford the time and/or money to attend full time courses in foreign countries. The effective combination of these three models of learning- traditional classrooms, Internet and practical experiences, has become necessary for the students of today to become successful professionals of tomorrow.&nbsp;</div>
	<div>
		 </div>
	<div>
		Nepal is moving towards using technology for education, replacing the traditional “Chalk and Talk” method. Midas Education, a pioneer in the development of ICT (Information Communication Technology) in the education sector, encourages interactive teaching and learning. Students make use of PowerPoint presentations and other IT tools to enhance their skills and be prepared for the modern world. To bring a drastic change in the education sector, growth of ICT is very important. Information flow is unavoidable today due to the Internet and students are using GOOGLE for their education along with textbooks. The next challenge for Midas Education is to take ICT to the villages but as anyone can imagine, it is not an easy task. Use of ICT increases accuracy and quality of education and saves valuable time. Thus, ICT is necessary to modify the existent education pattern and to develop it.&nbsp;</div>
	<div>
		 </div>
	<div>
		Initially, it is difficult to use a new technology and learning it might take some time. But, as soon as we get used to it, there are only benefits to enjoy. Technology makes life comfortable and fast. The real beneficiaries of technology in Nepal are the students. Technology has been making their lives easier. They can easily grasp vague concepts. They do not need to mug up their course books these days; they have a chance to present their creativity. Along with the students, teachers are also benefiting.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in Media Consumption &amp; Media Buying</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		There was a time when you had simple choices to make – like choosing one newspaper from the three or four available, one radio station, one television station that broadcast only in the evenings, a couple of magazines from half a dozen available and so on. As the market kept segmenting and fragmenting, we now have thousands of radio stations to choose from with WorldSpace, Star TV itself telecasting more than half a dozen channels round the clock, there are more than a couple of dozen newspapers to choose from, hundreds of magazines to choose from and the story does not end there. With the advent of newer technologies, we now have newer channels of communications like mobile, Internet and direct-to-home television along with exponential storage capabilities on optical media like CDs and DVDs. Today, a typical consumer is bombarded with more than 1,000 messages per day. Marketers are finding newer ways and means to target the consumers.&nbsp;</div>
	<div>
		 </div>
	<div>
		One limitation for media consumption and media buying for Nepali consumers comes from the frequent load-shedding. This problem also makes an impact on the convergence cycle. The current trend is that the media houses are using all forms of media from print to radio to TV to online portals. One form of media is subsidizing the other. During the winter season, when the load-shedding is at its peak, advertisements in the TV decrease significantly to only 25 per cent as compared to the summer season. However, while the TVs are suffering from losses, the ads in the radio increase. Thus, radio subsidizes TV. Image Channel initially owned two TV stations: Image Channel and Image Metro. Now, it has replaced Image Metro with a new radio station, Image News, while the already existent Image FM still exists. This is an example of merging different types of media in one window, which is possible due to media convergence.&nbsp;</div>
	<div>
		 </div>
	<div>
		Another example of convergence in media consumption is the way in which consumers actively hunt for information. 3G mobile handsets are designed for high speed Internet connections and the user opts to use them in a variety of ways; like checking the online navigation to watch out for traffic jams, weather forecasts, locating the nearest fuel station, hospital or even a restaurant; everything is possible with the mobile handset. It also backs up as a personal information manager (PIM), a music player, a camera and a portable gaming device. Internet usage on the phone is aiding to media consumption but many people cannot afford it.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in Media Ownership</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		A massive diversification of media, thanks to the Internet, materialized by millions of websites, fora, blogs and wikis is taking place. That evolution, often labelled citizen journalism or citizen media, makes it possible for practically everybody to be a media creator, owner and actor, instead of a passive user.&nbsp;</div>
	<div>
		 </div>
	<div>
		With the technological advancements, convergence is expected to take various new forms. One form of media subsidizes the other and this poses a risk of developing a media tycoon. Currently, the Kantipur Media Group can give a run to the state media monopoly. It has an online news portal, a TV channel and radio broadcasting stations along with print media of daily and weekly newspapers, and monthly magazines. It is also considered the fastest and most reliable source of news. This has all been possible due to the proper utilization of technology.&nbsp;</div>
	<div>
		 </div>
	<div>
		Some of the largest media conglomerates in the world include American Media Inc., Bell Globemedia, Bertelsmann, Canwest Global, NBC Universal, Hearst Corporation, Lagardère Media, Liberty Media, News Corporation, Grupo PRISA, Rogers Communications, Sony, Time Warner, The Times Group (distinct from Times Newspapers of News Corportation), Viacom (owned by National Amusements), CBS Corp (also owned by National Amusements), and The Walt Disney Company.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in the Interests of Dual Markets&nbsp;</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		As more and more companies across industries look at multiple media platforms, especially the digital media, it is also emerging as a revenue-earning model for most of them. Also, e-commerce is growing rapidly and a host of companies are setting up online shops across portals.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Two sides of Media Convergence</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		With freedom, come the responsibilities. Media convergence has made a positive impact upon the advertisers. They only need to buy a small space in the websites and their ads get displayed 24 hours a day for as long as they want. The ads on the TV and newspapers last for a shorter period and are comparatively more expensive than the online ads. The design of the advertisements can also be changed from time to time. Also, the growing trend of media houses trying to use all forms of broadcasting media and print media makes it possible for the advertisers to negotiate rates. Their marketing is now more cost effective than before. They can easily use different tools of media and show their advertisements to their consumers through websites, TV, radio, as well as newspapers.</div>
	<div>
		 </div>
	<div>
		The Interim Constitution provides publication and broadcasting freedom to media but again imposes certain restrictions that allow the media to enjoy only the relative freedom. The online media however does not follow these rules and regulations. Online media has no monitoring system and in today’s world, the flow of information is difficult to stop. Hence, news that can be harmful should be stopped from spreading.&nbsp;</div>
	<div>
		 </div>
	<div>
		The definition of media is not the same as it was a decade ago. Facebook is an example of this. This new social media has influenced us largely. Now, every citizen is a reporter as he or she can constantly update news through Facebook. The news about Paras Shah getting a heart attack was published in the Facebook before any other media houses could print or broadcast it. Technology is responsible for this. While 10 years ago, technology turned the world into a global village, today it has changed the world into a global family. If a person in Nepal gets married today and updates his photos on Facebook, his friend in the US can see the photos. This ignores the geographical boundaries and aids in sharing cultures between people of different nations. Thus, it has been making a positive impact worldwide.&nbsp;</div>
	<div>
		 </div>
	<div>
		When the Royal Palace Massacre took place in 2001, &nbsp;a rumour was spread saying that somebody had mixed a poison in the water coming from the Water Supply Tank in Sundarijal. That was a time when people had no other forms of communication except for the landline phones at their homes. If that was enough to discourage many people from drinking water inside Kathmandu valley, we must think how effective can such rumours be today. We have all the powerful tools of communication from mobile phones to the Internet and it will take only seconds for such rumours to spread. &nbsp;Hence, with media convergence, self-regulation is required. People are required to be more responsible. Ill-intended propaganda and rumours should not be published.</div>
	<div>
		 </div>
	<div>
		<strong>Future Impacts</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		It is certain that over the next five years, technology will not remain the same. Newer versions will be available that will bring about more revolutionary changes. Hence, impact is a vague word in future terms. With changes in technology, the working processes will change which will provide the necessary opportunities towards beneficial transformations. The use of the latest technology produces beneficial products but education regarding technology is a limiting factor for a country like ours. With around 50 per cent of the graduating population having some form of knowledge regarding Information Technology (IT), it is not an impossible challenge. However, the business owners and leaders have the responsibility of encouraging this population for increased use of IT. &nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Media Education: Need for a Paradigm Shift</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		<img align="left" alt="Media Education" height="139" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_media_education.jpg" style="margin:0 10px 0 0;" width="200" />The world today is in the midst of one of the most dramatic technological revolutions in history. It is effecting changes in everything ranging from the ways we work, communicate commerce and spend our leisure time. The technological revolution which is underway centers on computer, information, communication, and multimedia technologies and may be seen to be the beginnings of a knowledge or information society. In such a society, education has a central role in every aspect of life. The proliferation of communication-information technologies poses tremendous challenges. It compels educators to rethink their basic tenets and to deploy the media in creative and productive ways. It forces them to restructure ways of learning-teaching to respond constructively and progressively to the technological and social changes that we are now experiencing.&nbsp;</div>
	<div>
		 </div>
	<div>
		Midas Education has been contributing to the development of ICT for education for about 12 years now. This continuous growth of Midas comes from continuous positive responses and moral support they got from their customers. Just like the processors developed in recent years from Pentium IV to i7, adding more layers in their newer versions, Midas has also been adding layers in their work to promote the use of ICT in the education sector. &nbsp;Raju Baniya, Business Manager of Midas Education, says, “This has improved our results year on year. We started with making self learning CDs and now we are trying to transform the class rooms.</div>
	<div>
		 </div>
	<div>
		As a consequence of information super highway and communication technologies, media and communication education have undergone almost unbelievable changes. The old lines between disciplines are becoming obsolete. The work of professional communicators is undergoing a dramatic change. Resultantly, there are likely to be very few belonging to one discipline which might be conversant with all forms of media in the days to come. With such metamorphosis of the professions underway, it is a real challenge to prepare students for successful professional careers in the era of convergence and connectivity of the variety of media.&nbsp;</div>
	<div>
		 </div>
	<div>
		In an era characterized by convergence of technologies the need for skilled media professionals who understand the foundation, both ethical and practical, from which they need to work, becomes even more critical. But without adequate training in new media skills, the goal will remain unachievable. This crisis in media requires to be addressed in the class room where young professionals are molded and sculpted. But to meet the needs of the fast growing media industry, an ongoing training is vital to ensure that those working in the field have to grow and develop. This entails broadening, updating and upgrading the core component of the media education at various levels.&nbsp;</div>
	<div>
		 </div>
	<div>
		What media students today need is nothing short of a leading-edge education suited to the needs of networked globalised industry. This would involve greater accent on fundamental concepts, values and skills needed to prepare them for communication careers commensurate with unprecedented changes. They need be fully equipped to understand the whole of communication scenario, be able to solve problems and imbibe the ethical and legal implication of media and communication which will let them be comfortable with innovation and working in concert with their peers. The object of the new media education is to prepare students for leadership roles in their professions and in their communities.&nbsp;</div>
	<div>
		 </div>
	<div>
		With a view to achieving the object of quality media education, the institute of Mass Communications are in dire need of reconfiguring and updating their curriculum to produce graduates who are prepared for future leadership roles in the media and communication industries and who are able to communicate across disciplines and in multiple media formats. This for providing students with strong core content in critical thinking, research and analysis, information gathering, writing, graphics and design, and law and ethics and the latest media technology and skills. It is not always possible for teachers to take students to lab to conduct required educational activities. Similarly, the task of taking students for field visit for practical knowledge is also not possible every time. In this context, the MiDas eCLASS offers audio-visual contents that complement the lab activities and field visit to enable the students to gain real-life experience.&nbsp;</div>
	<div>
		 </div>
	<div>
		The media education departments must offer to their students fully computerized reporting and editing classes, and create totally digital classroom and laboratory systems. They must orient themselves to revise their journalism curriculum and always be ready to undergo continual adjustments in response to changes in the profession. Far from print and broadcast sequences running separate, as is the case today, students in the two sequences need to plan news coverage together and work together in the labs. Tomorrow, it is quite likely that the sequences might disappear and students will be required to work seamlessly on stories for print, electronic media and the Internet – or whatever systems will exist in the future.&nbsp;</div>
	<div>
		Same is the case for students of marketing communications who need to integrate the different tools of branding and marketing: advertising, public relations, event management, digital marketing, direct marketing, etc, before specializing in one functional area.</div>
	<div>
		 </div>
	<div>
		For entertainment media students, it is significant to integrate skills for the entire entertainment industry: from television to cinema, from radio to digital entertainment, from events to musicals, etc.</div>
	<div>
		 </div>
</div>',
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			'description' => 'With the advent of new medium over the Internet and the mobile, media convergence is now an increasing reality in the Nepali media and entertainment industry.',
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		'Article' => array(
			'id' => '874',
			'article_category_id' => '40',
			'title' => 'Insuring Nepal’s Aviation Risks',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong>By Sushila Budhathoki</strong></p>
<p>
	<img alt="Cover Story February 2013" height="329" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013.jpg" width="550" /></p>
<p style="text-align: justify;">
	<span style="text-align: justify;">“The higher the risk, the higher the potential return,” goes a popular saying. The economic logic is however that the profit is higher when risks are minimized. And there comes the insurance business to help the other businesses to reduce risks. In the process, both insurance companies and their business clients become happy. But this does not seem to be the case in aviation portfolio of Nepali insurance companies. &nbsp;Although aviation insurance is a high profile business in Nepal, it happens to be one of the weakest portfolios for most insurance companies in terms of profit. The aviation insurance business looks good in terms of premium collection but there is hardly any profit.&nbsp;</span></p>
<p style="text-align: justify;">
	The reason is: the insurance companies providing aviation insurance have to pay a high amount of premium – more than 99 per cent at times - to the reinsurance companies abroad. In fact, the companies are sustaining their aviation insurance business from the commission they get for the premiums paid to the foreign reinsurers. Mahendra Shrestha, Managing Director of Himalayan General Insurance, says, “Whether it’s profit or loss, it goes to the reinsurance companies. We (local insurance companies) are just the intermediaries. And if we fail to reinsure, we cannot sustain the operation. So, we have to depend on reinsurance companies abroad. There is no other choice.”According to Shrestha, some insurance companies are paying up to 99.97 per cent of the premiums collected to the reinsurance companies. “It has been a non-profit business for even most of the reinsurers who have only two choices - walk away or keep doing business at high premium rates to recover previous losses,” he adds.&nbsp;</p>
<p style="text-align: justify;">
	A three-year data (From 2009/10- 2011/12) of Beema Samiti, too, depicts the pathetic condition of Nepali insurance companies in aviation portfolio. During this period, only a few companies could make some profits which however, is paltry (See table 1). Rameshwor Thapa, President of Airlines Operators Association of Nepal (AOAN), says, “Since this is a highly regulated and risky business, there can be loss or profit and the clients also contribute in both these factors.” There are altogether 25 insurance companies including 17 non-life insurance companies in Nepal. Among the non-life insurance companies, seven &nbsp;deal in aviation insurance (See table 2). Nepal insurance Company Ltd and Neco Insurance which were doing aviation insurance previously have pulled their hands from aviation portfolio now.</p>
<p style="text-align: justify;">
	Lack of domestic reinsurance companies and low retention capacity of Nepali insurance companies has resulted in huge amount going abroad as remittance premium. The Nepali airlines are paying around USD 8-9 million premiums to the insurers yearly. The Nepali insurance companies retain 0.5 per cent of this and send the rest to the reinsurance companies.&nbsp;</p>
<p style="text-align: justify;">
	Dip Prakash Panday, CEO of Shikhar Insurance, says, “The way our aviation business has been exposed, we cannot afford the risks. Who will bear the risk if some big loss occurs?” Panday asks, adding, “We are not sending money, we are transferring the risk. The &nbsp;companies are still in profit because the money is flowing in from the reinsurers abroad as commissions. Since they agreed to take the risk, they bear the loss as well, when it happens.” Shikhar Insurance, &nbsp;one of the major players of Nepal’s aviation insurance business earned Rs 10.5 million as reinsurance commissions last year.&nbsp;</p>
<div style="padding:10px; background:#f4f3e6;">
	<strong>Nepal’s First Aviation Insurance Summit&nbsp;</strong></div>
<div style="padding: 10px; background-color: rgb(244, 243, 230); text-align: justify; background-position: initial initial; background-repeat: initial initial;">
	<img align="left" alt="Aviation Insurance Summit" height="173" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(2).jpg" style="margin:0 10px 0 0;" width="300" />Held In January, an ‘Aviation Insurance Summit’ was held in Kathmandu where all the stakeholders including the reinsurance companies participated. The summit brought about a fresh wave of optimism in Nepal’s aviation insurance sector. Mahendra Shrestha, MD of Himalayan Insurance, who was also in the organizing committee says, “The Summit brought local stakeholders, including operators, regulatory bodies, insurance companies and banks as well as key players in the regional and global aviation insurance industry including underwriters and reinsurance brokers under one roof. It gave the Nepali stakeholders a global perspective on our current situation as well as access to the expertise of visiting delegates.” He further adds, “After the summit, all the delegates expressed that they found it to be a helpful introduction to the Nepal aviation insurance market and that it helped them take better decisions about supporting it.”</div>
<p style="text-align: justify;">
	 </p>
<p style="text-align: justify;">
	Airlines insure their fleet according to the value of the aircraft. The reinsurers charge different premiums depending on the type of aircraft, experience of the pilots and engineers, infrastructure, equipment, management facilities and age and the value of the aircraft. Aviation insurance coverage is categorized into the following types: Hull, War, Allied, Perils Insurance, Third Party Liability Insurance, In-flight insurance, Passenger liability insurance etc. The passengers are insured at USD 20,000 each and crew member at USD 40,000 each while the coverage of other categories like hull, war etc varies from airline to airline. According to the operators, the reinsurance market in Nepal was dependent on the India for a long time since it started in the early 1960s. In recent times however, as both the risk and the premium witnessed a constant upsurge, the market shifted to Europe. Indian Insurance companies like GIC, ICICI Lombard, United India and IFFCO-TOKIO were the main reinsurance partners of insurance companies previously, but the number of Indian reinsurers who do reinsurance business in Nepal has decreased over the past few years. &nbsp;</p>
<p style="text-align: justify;">
	<strong>High Premium</strong></p>
<p style="text-align: justify;">
	After the 9/11 terrorist attack in the US in 2001, where two planes - American Airlines Flight 11 and United Airlines Flight 175 - were crashed into the North and South Trade Towers, the aviation sector saw a sudden rise in premiums globally. After the incident, most of the reinsurers increased their premium rates worldwide while others loaded the premium according to the risk factors. Nepali airliners are charged up to 12 per cent premium now while airliners generally pay 4-6 per cent internationally. Previously, the premium rate for Nepal was up to 7 per cent. Thapa says, “We used to pay USD 30,000 as &nbsp;premium as early as six years ago. Now we have to pay USD 300,000 for the same aircraft – 10 times more than the premium rates in the past.” Currently, Tara Air and Agni Air are paying up to 12 per cent premium. However, Panday says that the premium rates differ from airline to airline. He says, “It is not that all airlines have to pay a high premium. The premiums of some airliners are as low as 1.5 per cent.”&nbsp;</p>
<p style="text-align: justify;">
	There are many conditions when the reinsurers charge high premium. They charge more if they discover that the airliners have had an air accident in the last five years or have a high frequency of making claims. Prem Bahadur Maharjan, Chaiman of Rastriya Beema Sansthan (RBS), says, “The risk factor is not within our control and that needs to be reinsured with other international insurance companies outside the country.” Decrease in the number of airlines due to the crashes and age of the aircraft lead to also high premiums. Prof Dr Fatta Bahadur KC, Chairman of Beema Samiti, says, “We had had the normal rates. But when one reinsurer increases the premium rate, others follow suit. Now the weakest airliners have to pay dearly while others too are paying high charges.”&nbsp;</p>
<p style="text-align: justify;">
	As Nepali aviation insurance is serviced by the international reinsurance market, rising premium rates is affecting the sustainability of the business. As the risk increases the market becomes limited and the airliners have no choice but to accept the high premium rates. Kewal Krishna Shrestha, CEO of Everest Insurance says, “The aviation business is running though the reinsurers are charging up to 12 per cent. But what if they charge 20-25 per cent? I don’t think the aviation industry in Nepal could bear such high premiums.” He says the environment in future could be such that even the high premium might not draw the reinsurers into confidence because of the high risk involved in the Nepali aviation and that the reinsurers could add more clauses which could affect the overall aviation business in Nepal.&nbsp;</p>
<p style="text-align: justify;">
	The reinsurers, however, insist that the premium is always determined by the risks anywhere in the world. According to Dr Pronab Sen, CEO of Nepal operation of National Insurance Company, the government-owned insurance company of India, the premium is based on the past losses. He says, “If you see the statistics, almost every year there is a crash and sometimes, there are 2 crashes in Nepal. And the rate of premium is governed by the reinsurance market. Because of the air accidents, some of the reinsurers were hesitant to do business in Nepal.” Sen adds, “We have our own retention limit. Depending on our financial strength, we retain a very small portion of the risk and reinsure the rest with other reinsurance companies. This is a worldwide practice in the insurance business. It depends on portfolio and risks. Sometime we retain 20 to 80 per cent- sometimes 90- depending on the risks.” Doug Horne, Marketing and Business Development Manager at Airclaims- A UK-based leading reinsurance company, shares a similar experience. He says, “The present level of risk is too high but there are enough insurers willing to support the market, albeit currently at a higher cost than in some other places.”&nbsp;</p>
<div>
	<img alt="Aviation Insurance Business" height="298" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(3).jpg" width="550" /></div>
<div>
	<div>
		<strong>The Risky Rural</strong></div>
	<div>
		 </div>
	<div style="text-align: justify;">
		The airlines which fly mostly in the hilly region are among the high premium paying ones. On the trunk routes, the premium is only around 3-4 per cent and in the case of STOL (Short Take Off and Landing) runways, the premium rate varies from a minimum 3 to a maximum 12 per cent. Due to the risk in rural areas, the reinsurers load more premiums on them. According to the operators, the aviation insurance started becoming a loss-making business for reinsurers since 2009. There have been eight aviation crashes, killing 114 people in the past six years. Almost all these accidents took place in the hilly region. Of them, six deadly accidents occurred in 2011 and 2012 alone, excluding four helicopter crashes of which a couple were fatal. Being a mountainous country, the weather, terrain and the high altitude in the hilly region are the major challenges for the aviation sector. Poorly managed and small airfields, unpaved runways and lack of manpower to co-ordinate pilots in these areas are considered the reasons behind the air crashes. An aviation expert, requesting anonymity, says, “We need pilots who are well trained and have a sound understanding of weather pattern, especially clouds.”&nbsp;</div>
	<div style="text-align: justify;">
		The emergence of private airliners in domestic air transport started in 1992 when Nepal adopted a liberal aviation policy. And in 2002, expansion of the International Terminal Building at Tribhuwan International Airport (TIA) and the construction of a new Air Cargo Complex made it convenient for the international airliners to operate in Nepal. This increased the flow of international tourists in Nepal. Increased tourist arrivals, in turn, have led to a growth in the aviation business and aviation insurance business too. This is why the aviation insurance business has grown over &nbsp;the past decade. There are 10 fixed-wing airplane operators and five helicopter operators in Nepal at present. The Civil Aviation Report 2011-2012 also depicts a steady growth in the aviation sector with increasing flight movement.&nbsp;</div>
	<div style="text-align: justify;">
		There are altogether 54 airports in Nepal. Among them, 34 are operational at present. Among the running airports, eight are on the trunk routes- while the rest are in the remote areas. Thapa says, “Trunk route operators have fewer problems in comparison to the STOL route operators mainly because of the high hills and high altitude. There have been many instances of chopper accidents on the STOL routes.” Airports in Pokhara, Biratnagar, Janakpur, Nepalgunj, Bhairahawa, Kathamandu, Dhangadi and Chandragadhi are on the trunk route. The domestic aircraft which fly in trunk route have a minimum seat capacity of 15 and a maximum of 72 while the planes in STOL routes have minimum seat capacity of 9. &nbsp;Big aircraft fly on the trunk routes while the small ones &nbsp;are considered best for the hilly region. Suresh Acharya, Joint Secretary at Ministry of Tourism and Civil Aviation (MOTCA) says, “There is a high risk on the STOL route especially for twin-otters. There is an urgency to enhance the capacity of the pilots who fly on the STOL routes. ”</div>
</div>
<div>
	<div style="text-align: justify;">
		 </div>
	<div style="text-align: justify;">
		<strong>The aviation insurance cover</strong></div>
	<ul>
		<li style="text-align: justify;">
			Hull All Risk (Loss or Damage to the Aircraft)</li>
		<li style="text-align: justify;">
			Hull War</li>
		<li style="text-align: justify;">
			Passenger and Cargo Legal Liability</li>
		<li style="text-align: justify;">
			Crew Personal Accident</li>
		<li style="text-align: justify;">
			Pilots Loss of License</li>
		<li style="text-align: justify;">
			Third Party Liability</li>
	</ul>
	<div>
		<div style="text-align: justify;">
			<strong>Bad Image</strong></div>
		<div style="text-align: justify;">
			 </div>
		<div style="text-align: justify;">
			The frequency of accidents has created fear in the reinsurers’ minds, pushing Nepal into a ‘risk zone’. These accidents could have negative impact on the country’s tourism if the casualties included many foreigners. Nepali aviation sector had gone through similar hard times in the past too. Ten years ago when Maoist combatants set ablaze Fishtail Air’s helicopter in western Nepal, domestic airliners got notification from the reinsurance companies abroad that they won’t compensate the losses in case of any terrorist attack. &nbsp;Panday says, “Fear is a very dangerous thing. Our terrains are difficult, which has sent a wrong perception. Similarly, loss is also a perception and can be changed. All we need is 3 to 4 years of good loss ratio.”</div>
		<div style="text-align: justify;">
			The domestic airlines are often accused of poor maintenance of their airplanes and the pilots of not following the standard operation procedures. Similarly, it is said that there is often a lack of co-ordination between the&nbsp;captain and co-pilots. Acharya says, “According to our findings, human factor is responsible for 80- 85 per cent accidents. The remaining 15 per cent accidents are caused by failure of machine, bad weather etc. It seems that the pilots are not very efficient at taking the right decision in time of emergency or they do not make the maximum use of the cock-pit. Lack of co-ordination between pilots and co-pilots and no guidance from the ground people when the plane is flying is common.”</div>
	</div>
</div>
<div style="text-align: justify;">
	<img alt="Income and Expences" height="216" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(4).jpg" width="579" /></div>
<div style="text-align: justify;">
	 </div>
<div style="text-align: justify;">
	<div style="">
		Lack of consultation between the government and insurance authorities for resolving the key issues of the aviation sector has made the aviation business worse. Acharya says, “The government is unaware about the kind of image the reinsurance companies are making of Nepal. They should have believed the government’s aviation report.” He further adds, “We need to develop that kind of mechanism. We are ready to help whenever they need any support from the government. All we need to do is build that kind of mechanism where the government as well as the insurance companies could sort out the problems together.”&nbsp;</div>
	<div style="">
		The use of ‘old’ aircraft by some domestic airlines has only added to create a negative image of the Nepali aviation, though people in the industry and experts do not call it a problem. According to a Nepali scholar who has a Master’s degree in Aeronautical Engineering from Poland, not following the standard operation procedures by the aviation operators is the major drawback in Nepal’s aviation. He says, “It does not matter whether the plane is old or new; what matters is its scheduled as well as need-based maintenance.” Lack of distance measuring equipment (DME) at airports is another shortcoming for the country’s aviation sector. He adds, “Towers are more helpful in tracking the aircraft in the right way. However, most of our airports rely on windsocks &nbsp;to indicate wind direction and the relative wind speed. This is risky. Sometimes, there is no one in &nbsp;the towers at the airports to coordinate with the flying pilots.”&nbsp;</div>
	<div style="">
		An aircraft is generally considered safe until the deadline given by its manufacturer. There is a manual for every air plane and manual for flying hours including number of flights a day. The Beema Samiti issues, renews, dismisses the licenses of insurance companies, insurance surveyors and insurance agents. It has also been “working for the development, management and regulation of the insurance business in the country.” The BS 2067 Report of Beema Samiti has also recognized scarcity of skilled manpower, unhealthy competition among insurance companies and lack of reinsurance companies within the country as the major problems of the aviation insurance business. However, the Beema Samiti has not been able to address these problems properly. Maharjan says, “There has to be a strict monitoring mechanism for air traffic discipline and safety education to the people involved in the aviation business. Pilots should also be alerted against taking any sort of risks. Aviation safety is not related to money only; it’s about lives of people.”</div>
	<div>
		 </div>
</div>
<div style="padding:10px; background:#f4f3e6;">
	<strong>Utilizing Civil Aviation Academy&nbsp;</strong></div>
<div style="padding: 10px; background-color: rgb(244, 243, 230); text-align: justify; background-position: initial initial; background-repeat: initial initial;">
	If given due importance, the Civil Aviation Academy (CAA), the only training center for aviation related training in Nepal, could be beneficial to the whole aviation industry. CAA conducts basic, refresher, induction and recurrent trainings related to Air Traffic Control, Aviation Security, Fire fighting and rescue, CNS and others based on quality curriculum. Though it is the only state’s approved aviation training organization (ATO) in Nepal, the private sectors have failed to utilize them properly. Mahendra S. Rawal, Chief of CAA says, “Though we are also in the developing phase, we can still work together to develop expertise. Together we can either develop the infrastructure here or bring expertise from outside the country.” The CAA runs courses on Air Traffic Services (ATS), Engineering, Aviation Security, Aerodrome rescue and fire fighting among other five dozen courses ranging from knowledge based to competency based training.</div>
<p>
	 </p>
<p>
	<strong>The Way Forward</strong></p>
<p style="text-align: justify;">
	Mergers among insurance companies to increase capital base is regarded as one of the possibilities for enabling the insurance companies financially. The insurance companies are also trying to increase their retention capacity from 0.5 to 1 per cent which has spread positive message to their clients. There have been many progresses in Nepal’s aviation sector. From the month of Kartik, this year; Tourism Ministry has revised the provision of compulsory payment of 60 million dollar in third party liability to airliners during the registration time. CAAN has subsidized up to 8 million dollar to the airlines that fly to rural areas. An agreement was signed between the Government and CAAN for Capacity Enhancement Project of TIA under ADB loan in 2010. A safety audit was carried out in Nepal from 5 to 14 May 2009 according to the Universal Safety Oversight Audit Program (USOAP) as provisioned by ICAO and the Corrective Action Plan based on the flight safety. The findings of the audit have already been submitted to ICAO. Furthermore, a provision has been made to perform all activities in congruence with the concept of ICAO USOAP Audit Continuous Monitoring Approach (CMA).&nbsp;</p>
<p style="text-align: justify;">
	Tri Ratna Manandhar, Director General, CAAN says,” We have followed international standards in safety measures and the maintenance of aircraft is carried out as per the European standards- EASA Part-145. Buddha and Yeti airlines have already started it and others are in the process.” According to him an ICAO team is visiting Nepal in July 2013 for audit. He says, “After this ICAO audit, we will be able to prove that we have made progress in aviation management including the safety.” CAAN has been conducting strict safety programmes for safety and maintenance for the past six months. Likewise, the board of CAAN approved Air Operator’s Requirement (AOCR) in November 2012 which clearly mentions the requirements to get Air Operator Certificate. It has also managed the maintenance of aircrafts by AMT (Aircraft maintenance technician) from UK from this year. It is also planning to build an isolated parking for the planes having bomb threats and hijacking etc next year.&nbsp;</p>
<p style="text-align: justify;">
	No compromise &nbsp;at all with safety could be the best way to lower the high premium in Nepal’s aviation insurance, say the experts. The airline operators, too, are more aware about maintaining the safety standards today than in the past. AOAN has been organizing many seminars on aviation and programmes to help lower the premium by assuring safety. Thapa says, “There have been programmes organized aimed at enhancing the safety measures and we are very much confident that we would be able to enhance the safety measures.” He adds that airline operators are optimistic about reducing the risks. “A plane using only the Visual Flight Regulation (VFR) should not be allowed to go through the clouds. Pilots too should stop flying in pressure. If we follow all the safety measures definitely the risks have to go down. Civil Aviation Authority of Nepal (CAAN) should monitor these flights and instruct the airlines accordingly,” He says.&nbsp;</p>
<p style="text-align: justify;">
	Experts also feel the need of &nbsp;terrain awareness and warning systems (TAWS) developed by manufacturers and safety regulators to prevent accidents from Controlled Flight into Terrain (CFIT). CFIT is among the leading causes of airplane accidents involving the loss of life worldwide. The Wikipedia describes it as an accident in which an airworthy (fit to fly) aircraft, under pilot control, is unintentionally flown into the ground, a mountain, water, or an obstacle. With improvements in infrastructure, training and operations, reinsurers are also optimistic in reducing the cost of insurance to a reasonable level. Horne from Airclams says, “The prospects for aviation insurance business in Nepal are bright. There is a capable and knowledgeable local market which has good relationships with the global insurance community.” He adds, “What is perceived as the current high cost of insurance can and should be reduced for operators who demonstrate a good safety culture and record, adopt a Safety Management Programme that is working well and can prove that it is making a difference.”</p>
<p style="text-align: justify;">
	While the formation of a pool of all the insurance companies to collectively handle the claims in aviation insurance is in the initial phase, the government is planning to convert the insurance pool into a reinsurance company under Beema Samiti. &nbsp;Ramesh Lamsal, Executive Director of Insurance Pool says, “We have not prepared the business plan about aviation insurance yet. But if the aviation segment is included it will support the aviation business in Nepal.” Government authorities say that if the main players in the aviation business in Nepal- the airliners and insurance companies prepare appropriate strategy for the safety measures they are ready to co-operate insurance companies and protect them from those risks. Dr. KC says, “There should be positive attitude towards the formation of possible reinsurance company in Nepal after calculating the advantages and disadvantages on the business. The foremost thing is that it should be for the stability of the aviation business.”</p>',
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			'description' => 'The insurance companies providing aviation insurance have to pay a high amount of premium – more than 99 per cent at times - to the reinsurance companies abroad. In fact, the companies are sustaining their aviation insurance business from the commission they get for the premiums paid to the foreign reinsurers.',
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			'title' => 'Nepali Insurance Companies Are Paying Big Premium To Re-insurance Companies',
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			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘Nepali insurance companies are paying big premium to re-insurance companies’</strong></p>
<p>
	<img align="right" alt="Fatta Bahadur KC, Chairman Beema Samiti" height="329" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/fatta_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></p>
<address style="text-align: right;">
	<strong>Prof Dr Fatta Bahadur KC</strong></address>
<address style="text-align: right;">
	<strong>Chairman</strong></address>
<address style="text-align: right;">
	<strong>Beema Samiti (The Nepali regulator of Insurance Sector)</strong></address>
<p>
	 </p>
<p>
	 </p>
<p style="text-align: justify;">
	<strong>What is the size of the aviation insurance market in Nepal?</strong></p>
<p style="text-align: justify;">
	Aviation insurance is one of the important portfolios in the insurance sector. So far as the size of the aviation insurance is concerned, it has been increasing every year. There are altogether 17 non-life insurance companies registered. But only seven of them are into the aviation insurance business. The annual premium collection from aviation insurance in Nepal is about Rs 3 billion.&nbsp;</p>
<p style="text-align: justify;">
	<strong>It is said that some insurance companies are trying to form a pool to handle the aviation insurance claims collectively. What is the latest progress in this regard?</strong></p>
<p style="text-align: justify;">
	I, too, have heard that some insurance companies are trying to tie &nbsp;up to form such a pool. But this is yet to get a concrete shape, as far as I know. I think the main objective behind forming such a pool is to reduce insurance risks in the aviation sector. We hope the pool will come into operation in the near future.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What future do you see for the aviation insurance business in Nepal?</strong></p>
<p style="text-align: justify;">
	The future of aviation insurance business is bright. As the government has already adopted a liberal economic policy, many new airliners have entered Nepal. Aviation insurance as a business has grown in Nepal with the growth in the domestic aviation sector. &nbsp;Air travel has become convenient and affordable for many Nepalis today. This has ultimately helped the aviation insurance business grow in the country.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Almost whatever the insurance companies earn from the aviation segment goes to the reinsurance companies abroad. Some are even said to be making losses in the aviation segment. It is said that the companies know that they are not going to make profits from the aviation segment. But they do aviation insurance just to show high amount of premium collections. What do you say?</strong></p>
<p style="text-align: justify;">
	It is obvious. Though, insurance companies should have retention capacities to bear the risks by themselves, most of them lack this. This is one of the reasons why they transfer their risks to the re-insurance companies. Consequently, Nepali insurance companies have to pay a high volume of premium to them. The margin between the premium collected from the airlines companies and the premium paid to the re-insurers is very small. It shows that they are not able to save even the cost to transfer their risks. They need to transfer funds to reinsurance companies. It is a very serious problem.&nbsp;</p>
<p style="text-align: justify;">
	<strong>How can we lower the high insurance premium?</strong></p>
<p style="text-align: justify;">
	First of all, the airlines should try to be safe from different risks. Other stakeholders like CAAN should also maintain the runways properly and other technical aspects, information dissemination practices etc. The pilots, too, should be well-trained. All other stakeholders in the aviation sector should take this matter seriously, work on it together and make careful collective efforts to avoid risks.</p>
<p style="text-align: justify;">
	<strong>Aviation insurance premium in Nepal is said to be among the highest in the world? Why is it so high?</strong></p>
<p style="text-align: justify;">
	Yes it is true. Since the premium is always determined by risks; a high risk ultimately draws a higher premium. This risk is mainly associated with aircraft accidents; the more the accident, the more the risks. We have been trying to reduce the risks in this sector which is known as mitigation of the risks.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The annual claims payout in the aviation sector has been constantly rising. Some people say this could further increase the already significantly high aviation insurance premium. How are we going to address this problem?</strong></p>
<p style="text-align: justify;">
	It is a compulsion for the aviation insurance business in Nepal. Generally, if the premium is high, the practice of insurance is low but in aviation insurance, if the premium is high you need to reinsure with other big companies because of the risk factor. You need to find reliable reinsurers, pay premium and transfer your risks to them. There is a direct and positive relation between the increasing rate of premium and the business of aviation insurance. However, if all these measures are properly adopted then the premium rate will be low.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There are various types of aviation insurance policies in the world. Are all of them available in Nepal?</strong></p>
<p style="text-align: justify;">
	We have only few aviation policies which basically cover the aircraft, crew-members and passengers. It also covers the sky, and if both the parties agree, grounded risks are also included in the aviation insurance. Generally, an insurance policy depends on the requirement of the policy holder. Therefore, the requirements of the airliners play a key role in the agreement between the insurance companies and the airliners.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. How helpful was this summit?</strong></p>
<p style="text-align: justify;">
	The summit was a milestone in Nepal’s aviation sector. It’s &nbsp;definitely a positive development. It helped the stakeholders in the aviation business to know each other and, at the same time, provided a platform to share their experiences, views and problems. I think the re-insurers, the under-writers and other stakeholders who participated in the programme knew the actual situation of Nepal and the aviation insurance business here. The summit was successful and the Nepali stakeholders have succeeded in addressing some of the key issue of the aviation insurance business in Nepal.</p>',
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	(int) 13 => array(
		'Article' => array(
			'id' => '872',
			'article_category_id' => '40',
			'title' => 'The Pooling Mechanism Is To Stabilize The Insurance Market',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘The pooling mechanism is to stabilize the insurance market’</strong></p>
<p>
	<strong><img align="right" alt="Mahendra Shrestha, Himalayan General Insurance" height="301" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/mahendra_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></strong></p>
<address style="text-align: right;">
	<strong>Mahendra Shrestha</strong></address>
<address style="text-align: right;">
	<strong>Managing Director</strong></address>
<address style="text-align: right;">
	<strong>Himalayan General Insurance</strong></address>
<p style="text-align: justify;">
	 </p>
<p style="text-align: justify;">
	<strong>What is your company’s stake in the aviation insurance market?</strong></p>
<p style="text-align: justify;">
	Himalayan General has been writing aviation insurance since 1998 and it is a portfolio we continue to be interested in.</p>
<p style="text-align: justify;">
	<strong>It is said that some insurance companies are trying to form a pool to collectively handle the aviation insurance claims. What is the latest progress in this regard?</strong></p>
<p style="text-align: justify;">
	Preliminary discussions have been initiated for the formation of aviation insurance pool. The formation of such a pool will not only allow insurance companies to gain capacity but also make it viable for the re-insurers to continue supporting Nepal’s aviation insurance market.</p>
<p style="text-align: justify;">
	<strong>What future do you see for the aviation insurance business in Nepal?</strong></p>
<p style="text-align: justify;">
	It is a portfolio which is an absolute necessity in Nepal and one that will continue to grow.</p>
<p style="text-align: justify;">
	<strong>Aviation insurance premium in Nepal is said to be one among the highest in the world? Why is it so high? How can we lower it?</strong></p>
<p style="text-align: justify;">
	Aviation insurance premium in Nepal is certainly very high. Some big losses in the last few years have pushed up the premium rates substantially. The continually rising premium rates are, of course, a serious concern because they impact the sustainability of the business. The pooling mechanism is one of the possibilities we are exploring in order to stabilize the market. Eventually, if the total premium paid is more than the total amount claimed in losses, we hope the premium will start to come down.</p>
<p style="text-align: justify;">
	What are the key challenges and issues facing the aviation insurance industry in Nepal and what needs to be done to address these challenges?</p>
<p style="text-align: justify;">
	Rising premium rates and shrinking market capacity are two major challenges the aviation insurance industry is currently facing. The Aviation Insurance Summit was one way to address these challenges and find a common direction for improvement and growth.</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. How helpful was this summit?</strong></p>
<p style="text-align: justify;">
	The Summit brought local stakeholders, including operators, regulatory bodies, insurance companies and banks as well as key players in the regional and global aviation insurance industry (including underwriters and re-insurance brokers) under one roof. It gave the Nepali stakeholders a global perspective on our current situation as well as access to the expertise of visiting delegates, all of whom have extensive experience in this sector, including in other countries with contexts similar to Nepal.</p>
<p style="text-align: justify;">
	All the delegates who attended the Summit said that they had found it to be a helpful introduction to the Nepal aviation insurance market, adding that it will help them take better decisions for supporting it.</p>',
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		'Article' => array(
			'id' => '871',
			'article_category_id' => '40',
			'title' => 'We Are More Aware About  The Safety Concerns Today Than In The Past',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘We are more aware about the safety concerns today than in the past’</strong></p>
<p>
	<img align="right" alt="Rameshwor Thapa, Airlines Operators Association of Nepal " height="314" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/rameshwor_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></p>
<address style="text-align: right;">
	<br />
	<strong>Rameshwor Thapa</strong></address>
<address style="text-align: right;">
	<strong>President&nbsp;</strong></address>
<address style="text-align: right;">
	<strong>Airlines Operators Association of Nepal (AOAN)</strong></address>
<p>
	<strong><br />
	</strong></p>
<p style="text-align: justify;">
	<strong>What is the size of the aviation insurance market in Nepal?</strong></p>
<p style="text-align: justify;">
	When talking about the insurance size, the Nepali aviation insurance business is small in global comparison. However, it has an addressable size in the context of the South Asian countries. That means the aviation insurance market in Nepal is neither big nor small but of medium size in terms of money as well as the number of insurers involved in this business. We now pay USD 8 to 9 million in premium to international companies annually.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Why is the aviation insurance premium so high in Nepal? How can we lower it?</strong></p>
<p style="text-align: justify;">
	The re-occurrence of air crashes have contributed to the increment of aviation insurance premium. The open sky aviation policy has helped the mushrooming of airliners in Nepal while the infrastructure remains almost the same. And there may be many issues concerning safety issues. The dramatic increase in premium is also because of the climate and weather. Importantly, trunk route operators have fewer problems in comparison to the STOL (short takeoff and landing) route operators mainly because of the high hills and high altitude. In STOL, mainly in helicopters, there are many instances of accidents beyond what could be conconsidered as normal. &nbsp;</p>
<p style="text-align: justify;">
	Now there are more airports and other facilities which could be rated higher in safety. We are organizing many safety seminars and programmes to lower the premiums with the safety much assured. There have been programmes enhancing the safety measures and we are very much confident that we would be able to enhance safety measures. We are more aware about the safety concerns today than in the past. The audit reports by ICAO and other organizations have diversified it further and made it clear also. Aircraft and passenger safety should be the airliners’ main concern. If we maintain all this - for enhanced safety in the aviation sector - definitely the premium will come down.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There have been more than 50 major accidents in the past 10 years. Why is the frequency of aerial accidents so high in Nepal?&nbsp;</strong></p>
<p style="text-align: justify;">
	It is very sad and bitter fact. The increasing premium in aviation insurance is making it difficult for the airline companies. These days we are trying to improve the security in the aviation sector and are not expecting such accidents again. We are working to reduce such accidents by organizing different seminars and programmes to enhance safety in the aviation sector. Through these safety seminars, we are being able to make the stakeholders aware about air safety. There, we make the pilots aware about focusing on safety while the stakeholders update themselves with different issues and activities in the aviation sector. All the people involved in this sector should understand that not compromising any safety measures but maintaining them will help mitigate the risks. Visual Flight Regulation (VFR) should not be allowed to go through the clouds. &nbsp;If we follow all these safety measures, definitely the risks have to go down. Civil Aviation Authority of Nepal (CAAN) should monitor these flights and instruct accordingly.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The annual claims payout in the aviation insurance has been constantly rising. This is bound to further increase the already significantly high aviation insurance premium. How are we going to tackle this problem?</strong></p>
<p style="text-align: justify;">
	We are concerned about this problem. Basically, if we are able to enhance safety measures, it would help to lower the premium paid out to reinsurance companies. Most of the re-insurers are quite convinced that we would be able to maintain safety properly. End of the Maoist war has also spread positive message to the reinsurers. In the past, we had to pay US$ 60 million premium in third party liability though we owned small aircraft. After knowing the problem, Nepal government addressed this. And now we have to pay some 10 million dollars for the same. The thing is, once we fix the safety problem, the premium will come down.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There are various types of aviation insurance policies in the world. Are all of them available in Nepal?</strong></p>
<p style="text-align: justify;">
	There are not various types of insurance policies in the aviation insurance. The available insurances are air-craft’s insurance, passenger’s insurance, cargo insurance, crew-members insurance- including others. There are insurance policies with same periphery and nature and are normally practiced in other countries as well. Now there are different types of reinsurance market but the problem is they take our situation as an alarming one. I think the situation is not that alarming. Some of the reinsurance companies really want to work and support the Nepali aviation sector which includes Indian as well as western reinsurance companies. A new aviation group in Malaysia is also interested in this business. Moreover the re-insurer companies are not of various types; they are of a singular nature and type.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. What’s your impression of the summit?&nbsp;</strong></p>
<p style="text-align: justify;">
	It was definitely helpful to us. I think the reinsurance companies that were finding threats in our sky are convinced that the premium which we are paying is not justifiable. We hope that in the coming days they won’t increase the premiums and won’t take our sky as an alarming one for aviation insurance. They got a chance to understand our aviation environment and we had a chance to put the reality in front of them. We were able to prove that there is neither any violence in the country nor any threat in the aviation sector. We were able to prove that we are quite committed to maintaining safety and that we are continuously working on it. We have learnt from past accidents and we are committed to avoiding such accidents.&nbsp;</p>',
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		'Article' => array(
			'id' => '1963',
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			'title' => 'NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013 : Panacea For Growth, Saluting The Best',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&ldquo;The political agenda dominated the national discourse and popular action in the last six decades of democratization of Nepal. Now is the time to evolve into the phase of economic agenda being on the top. The private sector of Nepal is the engine of growth, being efficient and cost-effective, and the government is to facilitate it through investment security, enabling laws like new Industrial Enterprise Act and Foreign Direct Investment Policy, et al.&rdquo;</div>
<div>
	&nbsp;</div>
<div>
	Thus spoke Shankar Koirala, Minister for Finance, Industries &amp; Commerce, Government of Nepal, inaugurating the maiden edition of the NewBiz Business Conclave &amp; Awards 2013, held in Hotel Soaltee Crowne Plaza on August 24.</div>
<div>
	&nbsp;</div>
<div>
	Nothing could have captured the mood, the spirit and the essence of this Conclave better than this statement. The Conclave was dedicated to finding a roadmap to doubling the economic growth from current 3.6% growth of the GDP to 7%, and beyond.</div>
<div>
	&nbsp;</div>
<div>
	In groups of three to five speakers, a large number of fore-ranking economists, thought-leaders, businessmen and invited guests from abroad focused on what may make the great Himalayan promise fulfilled and Nepal moving from the status of Least Developed Country to a Developing One within a decade by doubling its growth.</div>
<div>
	&nbsp;</div>
<div>
	&lsquo;Yes! We Can!&rsquo; was the spirit. &lsquo;Can Do&rsquo; was the motto. Even problems were noted as challenges to be tackled sooner or later. Indeed, for some time past now, in spite of several economic challenges, there has been a gradual amelioration of the situation too.</div>
<div>
	&nbsp;</div>
<div>
	Decades of political unrest, bitter ideological conflict, a shaky frame-work of democracy, despondency among some sections of the people, and challenges to entrepreneurship and of infra-structure have surely brought in an air of hopelessness among some youths. And, there is a large number of educated or skilled youths who are leaving the country for greener pastures around the world. It is not a wonder that Nepal receives as remittance equivalent to nearly a quarter of its GDP.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Not withstanding the challenges, every Nepali at heart dreams for turning the nation of exquisite beauty into the Switzerland of Asia. Every educated Nepali rightly wants to reap the best economic advantages of being land-locked between two large and fast developing neighbours, India and China. And, today, most adult citizens of this nation are waiting for ensuing elections to be held in time and peacefully, and political parties agreeing on a common economic agenda to take the country into a prosperous future.</div>
<div>
	&nbsp;</div>
<div>
	That was the spirit of the speakers in the Conclave (more details in later sections). Just a sampling of the views expressed in the Conclave:&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Last year service sector in Nepal grew by 6% and industry by 3% and hence it is not difficult to achieve 7% overall growth in a couple of years in Nepal. Industries here are running at half their capacity and just a better capacity utilization with a better labour situation and investments will double the growth.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Dr Yuba Raj Khatiwada</strong></div>
<div style="text-align: right;">
	<strong>Governor, Nepal Rastra Bank</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Vocational education is on the rise in Nepal, which is encouraging. The small and medium industries sectors are surviving by sheer hard work rather than an enabling business environment, and they must be encouraged.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Rameshore Khanal</strong></div>
<div style="text-align: right;">
	<strong>Former Finance Secretary</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;There are ample opportunities to promote specific districts with specific business focal points, like Dhading can be the organic district in order to access and expand the market of vegetables which covers the one-third of the Kathmandu market&hellip;.. Timely election being held, political class must rise to the occasion towards drawing a&nbsp;</span><span style="font-size: 14px;">Common Minimum Economic Agenda, towards which we from Nepal Inc are working.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>-Suraj Vaidya</strong></div>
<div style="text-align: right;">
	<strong>President, Federation of Nepalese Chambers of Commerce &amp; Industry</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;It&rsquo;s not just heritage and adventure, there are lot of scope in Nepal in terms of business and MICE tourism (Meeting, Incentive, Convention &amp; Exhibition).&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Amran Abdul Rahman</strong></div>
<div style="text-align: right;">
	<strong>Director, Malaysia Tourism</strong></div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Nepal can take a cue from Vibrant Gujarat Summit and its success in the economy of Gujarat, and can similarly bring in big ticket investments for hydro-power, infrastructure, manufacturing, tourism, agri-business and mines.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>- Sukanti Ghosh</strong></div>
<div style="text-align: right;">
	<strong>Managing Director (India), APCO Worldwide, USA</strong></div>
<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size:14px;">&ldquo;Nepal has more than half a century of planned economic development attempt. To achieve this target, we have to mechanise agriculture, commercial herbs, vegetables and fruits.&rdquo;</span></div>
<div>
	&nbsp;</div>
<div style="text-align: right;">
	<strong>-Binod Chaudhary</strong></div>
<div style="text-align: right;">
	<strong>President, Chaudhary Group</strong></div>
<div>
	&nbsp;</div>
<div>
	Where do we go from here? Future is pregnant with possibilities indeed.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Let&rsquo;s begin with the changing face of road network.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The Economic Survey of the Finance Ministry in 2013 says that more than 10,000 kms of roads are blacktopped, almost 6000 kms of road have been graveled, apart from nearly 8500 kms of earthen roads in Nepal. Except Humla and Dolpa, all other 73 districts have road access. The road connectivity with China has also added value to Nepal&rsquo;s economic sector. With the government trying to make the road investment strategy clear and long-term, there is enhanced interest of the private sector too in investing herein. The Public-Private-People Partnership driven Kathmandu-Kulekhani-Hetauda tunnel road is the signature evidence of this positivism.</div>
<div>
	&nbsp;</div>
<div>
	Coming to health and education, Nepal is on a positive direction to largely meet the Millennium Development Goals by 2015. Primary school enrolment has already crossed a whopping 95%, though at the secondary education level it is still one on three eligible children in education, in spite of some increase over the years. The latest infant mortality rate is at 9 per thousand live births, and maternal mortality rate has dropped to 229 per 100,000 live births, making the picture reasonably better than most South Asian neighbors. Significantly, nearly 4500 health institutions of various dimensions are providing health services to some 28 million people in this country. Nepal Living Standard Survey notes that one on four Nepalis today are below the poverty line, much better a situation than a decade or two ago.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Hydropower hopes have eluded the Himalayan nation for decades. Nepal&rsquo;s vast water resources are said to be next only to Brazil. However, till date Nepal is producing only 600 Megawatts of electricity whereas the known sources of hydropower can produce above 80,000 Megawatts, and it is still counting. This one sector alone can change the face of this nation. There are some clear signs towards progress. Upper Tamakoshi project with 456 Megawatts is progressing fast based on eco-friendly run-of-the-river model. Six other projects totaling around 240 Megawatts are also in progress. However, this sector needs clear and effective long-term policies, investment friendly environment and political stability.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The Agriculture sector has also taken a boost with 41 projec vts running on first priority and nine projects kept in second priority by the government, as listed by the National Planning Commission. These projects include special agriculture production program, co-operative farming, micro irrigation, livestock health service, agricultural research program, and others. The per hectare productivity today is around Rs.160,000, of the land available for agriculture and only 20 % is irrigated, and the average income of agriculture laborer has crossed Rs.70,000 per annum. Not the best of situations, but still no one dies of hunger in Nepal.</div>
<div>
	&nbsp;</div>
<div>
	In the manufacturing sector, the average growth rate per year over the last five years has been close to 2%. Production of food products, beverages, cigarettes, shoes, soaps, cement and plastic products have grown more than 3% per annum in this period. More than a thousand medium to large industries employing 300,000 of people function alongside more than a lac cottage and small industries with 600,000 people employed. Higher electricity and more and better roads can work miracles in this sector.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Finally, Tourism. It flourishes in tranquility. Civil war and political instability hitting tourism hard for some time in the past, Nepal is now witnessing positive signs with the total tourist arrivals in 2012 figuring 600,000 only by the air route! The average stay and spending per person per day are still low with less than 40 dollars a day spent by tourists. With 10 five star and 27 three and four star hotels, Nepal has a long way to go to tap the full potentials of tourism, which can be comparable to Malaysia or beyond.</div>
<div>
	&nbsp;</div>
<div>
	Yes, there is a long way to go for this beautiful nation of hardworking, patriotic and industrious people from the Mountains, Hills and the Terai-Madhesh, a nation where women have a better position in the society than many other South Asian nations in general in spite of poverty, a nation where youths work and study together in cities to earn economic independence, a nation where hugely diverse people live, work and enjoy each other&rsquo;s festivals together.</div>
<div>
	&nbsp;</div>
<div>
	The Nation awaits visionary statesman-like leadership ahead and the collective will of many to make a difference in the comity of nations.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The historic NewBiz Business Conclave and Awards is just the right step towards this direction: bringing to the fore the national economic priorities, trying to create a national consensus towards Common Minimum Economic Agenda, bringing forth the voices of business leaders and economists, and creating role models from among Nepal Inc in a nation where most political parties at least officially shun business and profits.</div>
<div>
	&nbsp;</div>
<div>
	Rightly did the NewBiz Chairman Madan Lamsal say at the onset of the awards ceremony, &ldquo;It is said that our work is our love made visible. This is indeed our labour of love. It is a historic moment to come to this point where New Business Age and Aarthik Abhiyan, the nation&rsquo;s leading business publications, salute the best performers in business who have been doing well in spite of economic challenges and political instability. And I congratulate each of the ten winners whom you will know in some moments from now one by one, in advance. We honor ourselves by honoring you. You have not done anything for awards, but for growth and development, to generate profits, employment, and welfare of a lot of people. You are our role models. A nation, yearning to grow, to be counted in the comity of nations, salute each of you for your extra ordinary achievement which will inspire the youth to dream and strive for more.&rdquo;</div>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
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				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p1%20(Copy)(1).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 283px;" /></td>
		</tr>
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			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						Minister for Finance, Industries, Commerce and Supplies, Government of Nepal, Shankar Koirala along with Newbiz Chairman Madan Lamsal and other distinguished guests launched a book titled &mdash; Nepalko Arthik Briddhi Ek Margachitra (Sambriddha Nepal Abhiyan) during the Conclave &amp; Award ceremony at Soaltee Crowne Plaza.</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
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			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p2%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 443px;" /></td>
		</tr>
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			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: center;">
						Invitees at registration desk of Newbiz Conclave &amp; Awards-2013</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
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				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p3%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 365px;" /></td>
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					<div style="text-align: left;">
						<div>
							Binod Chaudhary, President Chaudhary Group exchanging words with Professor Dinesh Chapagain and former finance minister Madhukar SJB Rana at Newbiz Conclave &amp; Awards-2013.</div>
					</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<div>
	&nbsp;</div>
<table align="center" width="100">
	<tbody>
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			<td>
				<img alt="NEWBIZ BUSINESS CONCLAVE AND AWARDS 2013" src="/userfiles/images/p4%20(Copy).jpg" style="border-width: 0px; border-style: solid; width: 550px; height: 285px;" /></td>
		</tr>
		<tr>
			<td bgcolor="#DDDDDD">
				<div align="center">
					<div style="text-align: left;">
						Minister for Finance, Industries, Commerce and Supplies, Shankar Koirala along with Dr. Yuba Raj Khatiwada, Governor of Nepal Rastra Bank, Newbiz Chairman Madan Lamsal and moderator of the Conclave Achyut Wagle during the interactive session of the Conclave.</div>
				</div>
			</td>
		</tr>
	</tbody>
</table>
<p>
	&nbsp;</p>',
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			'created' => '2013-10-08',
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			'description' => 'The Nation awaits visionary statesman-like leadership ahead and the collective will of many to make a difference in the comity of nations.',
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		'Article' => array(
			'id' => '1684',
			'article_category_id' => '40',
			'title' => 'Towards Prosperous  Nepal',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div>
	&nbsp;</div>
<div>
	What are the elements that shape the country&rsquo;s transition from volatile politics to stable democracy? All too often, policy analysts focus on the political process, while neglecting the vital role of economic reform in determining democratic success or failure.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In the last decade, high unemployment and lack of entrepreneurial opportunities posed serious challenges to Nepal&rsquo;s transition. On the other hand, the country faced growing unresolved grievances caused by issues such as misappropriation of private property, rampant corruption and widening inequality.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Yet, there is silver lining. Despite a decade-long political turmoil and armed conflict, the country&rsquo;s economy was successful enough to maintain its basic economic indicators in a positive direction. It is for sure that the country will go through a long and complex journey before the current political transition will settle to form a stable democracy. The question remains as to how to unleash economic prosperity in the current situation.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Many believe that the country can achieve prosperity if elections are held on time as political parties will agree on a common economic agenda to take the country into a prosperous future.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The government on July 14 announced the annual budget of Rs 517.24 billion for the Fiscal Year 2013-14 through an ordinance. This is the first time in two years that a government budget has been announced for the entire fiscal year before the fiscal year begins. The budget of the current fiscal year gives special emphasis on elections to the Constituent Assembly by earmarking Rs 16 billion to hold the CA election. The budget has also emphasised on sustainable development along with economic growth and stability.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The government is heading towards a dream of achieving the status of a &lsquo;developing country&rsquo; by 2022 through a three-year plan. Many suspect whether the Nepali economy can begin the journey of prosperity in the given circumstances. The experience of the last decade, however, shows that the country can achieve things if the CA election is held on time and if political parties are united on a common economic agenda.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Despite political instability, Nepal has witnessed a noticeable growth in all sectors during the last decade. In recent years, many banks and money transfer businesses have grown. Nepal was one of the highest receivers of remittance on the basis of the Gross Domestic Product (GDP) in 2011.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Between 1980-2012, Nepal&rsquo;s Human Development Index (HDI) rose by 3.8 percent annually from 0.234 to 0.463 today, which ranks the country 157 out of 187 countries with comparable data.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Nepal is one of the 189 countries committed to the Millennium Development Goals (MDGs), a pledge renewed in its three year plan (2010-2013). The data from MDG progress report for Nepal 2010 prepared in partnership between the government of Nepal and the UN country team indicates that Nepal may be able to achieve most of its MDG targets by 2015.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	There are noticeable improvements in other economic indicators too. The national poverty line has gone down to 25 percent, net enrollment rate has increased to 93.7 percent, under five mortality has reduced to 50 per 1000 live births and maternal mortality has reduced to 229 per 100,000 live births which is almost reduction by half in 10 years&rsquo; time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Be it the health and education sector or the manufacturing and industrial sector, the country has succeeded to achieve remarkable progress despite political instability during the last decade.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Improvements in health services have resulted in a decline in the mortality rate. The declining mortality rate coupled with high fertility rate has resulted in rapid population growth. Control of malaria and other epidemics and the expansion of medical and public health facilities also reduce morbidity and mortality in the country. School enrollments of both boys and girls at all levels have increased.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	There are rays of hope also in the hydropower sector too. Currently a power deficit country will be a power surplus one by 2018 if all ongoing projects will be completed within a stipulated time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Around a dozen of hydropower projects including 556 MW Upper Tamakoshi, 50 MW Upper Marsyngdi, 60 MW Trishuli 3A and 42 MW Upper Modi along with others are under construction. These projects are supposed to end existing massive power outage problem and lead the country into the era of industrialisation.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	During the conflict era, the tourism sector suffered a lot resulting in the closure of some renowned five-star hotels. The conflict also tarnished the image of the country in the global scene. However, the entire tourism sector has started to revive now and it is certainly no surprise that hotels have mushroomed in recent years. As the number of tourists and foreign business travelers in Nepal are growing in step with its economy, Nepal&rsquo;s rapidly maturing hotel industry is one of the key beneficiaries. The tourism sector has given much to the Nepali business community to cheer.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The total contribution of the travel and tourism sector to the GDP stood at RS. 119.1 billion in 2011, according to the World Travel and Tourism Council and was forecasted to rise by 4.8 percent in 2012 and by 4.1 percent per annum to NRP 185.5 by 2022.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Some of the road construction projects that are under the works raise hope in the realm of infrastructure development. Tripura Sundari to Satbanjha (25 km), Satbhanja to Gokuleshwar (54 km), Khodpe to Kalinga Bridge, Chainpur (62 km) are some major projects to connect rural Nepal by road access.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	These projects would lead to a 6 percent increase in the number of people with all-season road access and a 35 percent decrease in travel time.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Educating and uplifting the status of the vulnerable and marginalised children, women empowerment through community-based livelihood enhancement projects is a tool to leap forward. Programmes of integrated rural development and nature conservation in the mountain region of Chitwan district is worth mentioning for steady rural reconstruction in Nepal.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Not only the telecom sector but also the entire Information and Communication Technology (ICT) sector has been witnessing a remarkable growth after the political revolution in 1990. Both growth and expansion of the ICT sector has lured many brands and companies to invest in the country. The monopoly of the state-owned Nepal Telecom has ended and many players have emerged in the telecom and ICT business.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Today, all districts of the country have telecom facilities and consumers are using state-of-art technology and sophisticated devices to prove themselves tech-savvy. The government and private sectors are mulling to utilise ICT to boost the economy by using its maximum potential to promote all sectors.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In recent years, the agricultural sector has also gained attention from the government as well as the private sector. The government&rsquo;s plan to modernise agriculture, ease the distribution of chemical fertilizers, step up the construction of irrigation projects would at least decrease the country&rsquo;s dependency on import for the agro-products, making the country self-reliant.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Green Kathmandu, Clean Bagmati campaign will lift the face of the river flowing through the capital. The Melamchi Drinking Water Project will solve the problem of acute shortage of water in the Kathmandu valley.&nbsp;</div>
<div>
	It is always said that the youth are not just leaders of tomorrow but partners of today.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The population of youth between the age of 15 and 29 is 6.131 million in Nepal. This accounts for 26.5 percent of the total population. Consolidating youth for prosperous development should be the main responsibility of the state, private sectors, and civil society.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The nation should take advantage of young talent and energy, simultaneously solving problems of violence, instability and abusive behaviour. Considering these facts, it is necessary to invest energy and capacity embodied in the youngsters in a constructive way for the development of our country by making the rural youth competent and responsible.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Since we are going through a post conflict period, the state machinery should not neglect this mass. The government should come up with a plan to engage these large numbers of youth in creative and entrepreneurial ventures. This is the need of hour of our country. Also, it is the only way to enhance our youth with their energy and efforts.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In a country like Nepal, real development Let us dream together that one day the rural youth of Nepal will be able to lead not only the development process but also play a vital role in the economic, cultural and political sectors.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	As in an essay by noted litterateur Laxmi Prasad Devkota entitled &lsquo;Is Nepal Insignificant?&rsquo; where he eloquently writes about the prospects of Nepal, this country has tremendous potential for economic growth. But all we need to boost the country&rsquo;s economy are commitment from the political leadership, positive thinking of the general public and sincere and genuine efforts from the private sector.</div>
<div>
	&nbsp;</div>',
			'published' => true,
			'created' => '2013-08-23',
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			'description' => 'In an ideal situation, we have hopes of becoming Switzerland. In reality, our conversation begins with negative news. It seems Nepalis are very enthusiastic to change the country but put in little effort for their own part',
			'sortorder' => '1545',
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	(int) 2 => array(
		'Article' => array(
			'id' => '1446',
			'article_category_id' => '40',
			'title' => 'Towards Inclusive Growth',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div>
	&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<span style="font-size: 12px;">It was India&rsquo;s Montek Ahluwalia who coined the phrase &lsquo;inclusive growth&rdquo; in the 1970s with the World Bank (WB) Report &ldquo;Redistribution with Growth&rdquo;; and later it was reckoned that $ 1 per day (currently $ 1.25 per day) as being the line of absolute poverty which had to be traversed to be pro-poor and &lsquo;inclusive&rsquo;.&nbsp;</span></div>
<div>
	&nbsp;</div>
<div>
	Whereas Marx wanted &ldquo;forced redistribution&rdquo; of assets of the feudal and bourgeois classes for inclusion, Ahluwalia wanted redistribution through legal, monetary and fiscal interventions. The problem with both was that, as socialists, the concept lacked faith in the middle class as the true vanguards of democracy-- and the private sector as the true engineers of efficient and rapid economic growth and employment creation.</div>
<div>
	&nbsp;</div>
<div>
	And so this $ 1 a day &lsquo;absolute poverty&rsquo; thesis of Montek Ahluwalia gave birth to the Human Development thesis of Pakistan&rsquo;s Mahbul Haq, which basically sought &lsquo;inclusion&rsquo; by creating equality of opportunities for all those excluded, especially women and the girl child.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Haq pioneered the human capital revolution which got us to think of creativity and productivity as the true source of prosperity and human welfare and not the usual underscoring of the importance of natural, physical or financial capital. He got us to think of people as more than just labour. And he made them the centerpiece of development.</div>
<div>
	<img alt="" src="/userfiles/images/cs1.jpg" style="float: left; margin: 0px 10px 0px 0px; width: 220px; height: 328px;" /></div>
<div>
	The Human Development Index is his lasting legacy. Haq learnt from the experience of Pakistan in the 1960s that one could have 7% GDP growth and also suffer acute inequalities and inequities to exclude the poor from the fruits of growth&mdash;and worse, exclude 50% of the population of women who needed to be empowered by the State. He also re-introduced the concept of &lsquo;human security&rsquo; which was the foundation on which the Japanese economic miracle of the 1950s-70s occurred with little or no natural resources.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	&lsquo;Growth&rsquo; and &lsquo;development&rsquo; are related but different concepts. Growth theories apply to developed nations whereas development theories apply to underdeveloped nations mired in hunger, malnutrition, illiteracy, ill health, superstition, deprivation, exploitation and underemployment of human resources.</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth also refers to the need for a &lsquo;balanced growth&rsquo; between (a) agriculture and manufacturing and (b) urban and rural areas of a nation. Thus inter &ndash;industry analysis and input-output models were developed and regional economics became a separate discipline to deal with geographic inequalities in growth. (As early as the 1970s Centre for Economic Development and Administration (CEDA) under Tribhuvan University, intellectually led by the likes of Dr Harka B Gurung and Dr Ratna SJB Rana were doing such seminal work for Nepal for regional balance by examining possible growth centres and corridors, which was waylaid by foreign aid that opted for extraneous models of development. This eventually sowed the seeds of conflict in Nepal with its over-emphasis on the role of the central bureaucracy and a Kathmandu-centric model of development. I am referring to the failed Integrated Development Projects (IRDPs) of the World Bank and the several bilateral donors working in isolation of each other to practically make the central bureaucracy their own dysfunctional and corrupt fiefdoms. It failed because it was costly and opted for decentralization rather than devolution with bottom up local leadership development with people&rsquo;s participation).</div>
<div>
	&nbsp;</div>
<div>
	In the 1980s, a new growth and development paradigm was born-- &lsquo;sustainable growth&rsquo;. It was felt that the cost to the natural environment was not being factored in by the GDP approach as the very success of growth resulted in externalities such as environment degradation, pollution of air, soil, water&mdash;one may say, development&rsquo;s impact was toxic. For most of the time, growth theory was driven by concern for its pace and pattern of growth. Then comes concern for its impact on Nature. And thus was added a new dimension to &lsquo;inclusion&rsquo; theory.&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs2.jpg" style="float: right; margin: 0px 0px 0px 10px; width: 352px; height: 175px;" /></div>
<div>
	In the 1990&rsquo;s, led by Nepal&rsquo;s Gandhian statesman PM Krishna Prasad Bhattarai, a new concept was bestowed to the development paradigm. &lsquo;Pro-poor growth&rsquo; was the term coined by the SAARC Independent Commissioners in 1992 (see the SAARC Secretariat Report: &ldquo;Meeing the Challenge) as it began to grapple with growth models that tended to &lsquo;walk on one foot&rsquo;, as it were. Thus it emphasized Structural and Extended Structural Adjustment Programmes (SAP and ESAP) passionately underwritten by the International Monetary Fund (IMF) and the World Bank in tandem to usher economic and financial reforms since the 1980s.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The SAP and E-SAP model of growth and development ignored the contribution that the poor, especially women, could make to growth by treating them as objects of development and not the subjects. Hence the call for &lsquo;pro-poor growth&rsquo; with Organizations of the Poor to be engaged in self help, self development and self management by designing locally based growth and development models unique to its social, cultural and ecological environments. For this to happen, it called for Social Mobilization of the Poor by the State so that they can participate in development and democracy through the mechanism of the Market. It believed that South Asia could have 9% GDP growth with 3% being contributed by the poor themselves, if it followed a strategy of walking on two legs &ndash; (a) priority to agriculture (b) development of labour intensive SMEs in manufacturing (c) human development and human security (d) social mobilization of the poor to create Organizations of the Poor to pursue their own models of growth and at their own pace as also to countervail the power of the ruling and rural elites. Its lasting contribution is the inclusion of &lsquo;social capital&rsquo; as a viable and relevant development model where the local culture should be included, and seen as an enduring asset, along with the traditional local institutions in the form of Community-based Organisations (CBOs) and TVOs. (Alas, the NGOs, sadly, were trying to make them irrelevant being driven by extraneous social and political forces under the banner of universal human rights )&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs3.jpg" style="width: 525px; height: 175px; margin: 10px 25px;" /></div>
<div>
	&nbsp;</div>
<div>
	<strong>Development through Devolution (The Alternative Model for 2015-20)&nbsp;</strong></div>
<div>
	&nbsp;</div>
<div>
	It is unlikely that a top-down driven development paradigm comprising national planning, state enterprises, labour unions &hellip; will allow inclusion of all. This can only happen when opportunities are created for all by supporting markets garnished by agrarian, economic, financial, administrative and labour reforms. Not least maximizing a bottom up development paradigm with maximum scope for local leadership development and culture-specific innovations to achieve MDGs goals and targets by the locals themselves in tune with their own capacity to deliver. This requires that the national think tanks adopt more than Chamber&rsquo;s Participatory Research Approach (PRA) for Participatory Action Research (PAR) as underlined by the SAARC Independent Commission on Poverty Alleviation of 1992.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth must mean growth with productive employment by creating opportunities for jobs and by investing in one&rsquo;s human capital development of own self and family members for the jobs --in the context of globalization The primary focus of inclusive growth must be on quality of human capital and so needs inclusion of Private Sector as the engine of growth since they create jobs for employees and opportunities for the self-employed.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Planning must be macro, meso and micro, all harmonized strategically. The Macro Plan must project the desired structure of the economy for the next 25 years and the five year plan must be a human resource development plan that addresses the human capital requirements for the perspective economy of the future (say 2035) based on manpower supply and demand projections and plans judiciously integrated with the educational plan that opens avenues for vocational, apprenticeship, technical and technological for the variety of occupations in the national economy and in the global labour markets.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	In other words, the State will have 5 Five Year Rolling Macro Plans that will be supplemented by Meso Plans to strategically manage education, health, gender, children, youth, old age, disabled, castes and creeds, urbanization, water, energy, ICT, transportation, investment, saving, capital markets, credit flows, exports, imports, taxation, and also corporate governance, entrepreneurship development, R &amp;D; S&amp;T, and monopoly regulation, for example, depending on the number of Ministries to be created. The fewer the Ministries the better. Let us emphasize that these ministries must move towards being a &lsquo;managerial civil service&rsquo; (as happened in East Asia to turn their economies into Tigers) and not continue to function as the colonial &lsquo;administrative civil service&rsquo; mired in red tape and acutely devoid of horizontal communication and coordination.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Competition is the name of the game and with it goes merit &ndash;not reservations. Hence private sector must seek to gather the &lsquo;fortune at the bottom of the pyramid&rsquo; as part of their core business strategies. And SMEs and Micro Enterprises and Social Entrepreneurs are vital actors in the formulation and execution of the national and sector plans, as well as the creation of urban clusters and supply chains.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive growth requires that we take in a host of factors and forces like geography, demography, social factors and forces, governance etc and hence has to be participative to require decisions at all levels and all actors &ndash;not just the state guided by the NPC with its very weak basic and applied research capacities coupled with rapid turnover of planners with the political changes. Such NPCs are a waste of national resources and should be converted to an Advisory Economic Council with the Prime Minister Office (PMO), if they are genuinely needed. What is now needed is Integrated Sector Programming and National Performance Budgets governed by a Fiscal Management and Responsibility Act as exists, for example, in South Korea and India.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth is growth that benefits each and every segment of a society with no exclusions whatever. This means when women&rsquo;s work at home they be paid for and their contribution to the GDP be duly recognized and rewarded.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Nepal&rsquo;s development plan has to be framed in the perspective of the opportunities from India, China and Bangladesh in due cognizance of our economic structure and development constraints. It requires our policy planners and private sector to be proactively engaged in national and sector dialogues with each other: to set down targets and outcomes for coordinated policy and designing of sector and multi sector programmes aligned with the annual performance budgets. We have to assess feasible economic growth targets for each 5 yr periods first and foremost in consensus with the political parties&mdash;and not be driven by external agents and fanciful notions of the political leadership who are very, very weak in their understanding of economics and finance.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	We have to set achievable GDP and sector targets and act accordingly to secure them jointly with the local governments, NGOs and private sector Each target must be supported by country-wide action plan and programme. For example (a) eradication of illiteracy (b) raising GDP by 5.5% (c) agri growth at 4.0% (d) inflation down to 7.5% (e) industrial growth by 10% -- devolved to districts with their own targets set locally (f) lower capital output ratio through more efficient planning, choice of foreign aid and eradication of graft and corruption; ICT for better governance (g) gender budget for gender inclusion to name a few development agenda topics.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Immense macro economic benefits have accrued from remittances which is now 25% of GDP. It has helped reduce poverty from 42% (1996) to 24% (2012). It has prevented Nepal from economic collapse and stabilized economic growth at the midterm growth rate of around 3.5- 4% between 2005-13.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Yes, costs have been borne at the household and individual levels with the pain and suffering of international migration and debts incurred for it. However, one can take advantage from the challenges by planning the remittance economy better so as to empower women head of household and the girl child with the skills to fill in the job vacancies as happened during WWI ad WW II that liberated women once in for all in the West.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs4.jpg" style="width: 525px; height: 175px;" /></div>
<div>
	&nbsp;</div>
<div>
	<strong>Conclusions&nbsp;</strong></div>
<div>
	&nbsp;</div>
<div>
	South Asian concept of Inclusiveness is this: all growth and development models must be ingrained in our civilizational heritage&mdash;not that of the Greeks, Romans or Christians or Marx and Mao. Inclusiveness should be based on one&rsquo;s culture adapted for internally to achieve modernity and based on pragmatism for the greatest public good. It seeks to be grounded not on a Capitalist or Socialist Society with all its ideological baggage but on a Humane Society where Planet Earth is a Global Village embodied and enriched by pluralistic cultures and cosmopolitan individuals with multiple identities with equal value, as was bestowed upon us by the eternal wisdom of Swami Vivekanada.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Inclusive Growth and Development are super structure means to an end that needs to be holistically entrenched with sound social, economic, ecological and political structures that are themselves inclusive. Let us summarize the parameters and their variables here below:&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(A) Inclusive Society: formalization of CBOs, organization of the poor, social mobilization, preservation and promotion of multiple identity; maximum role for the social organizations; protects and promotes the joint family system rather than the state acting as nanny and nurse and creates a Commonwealth of Plural Societies with various civil society organizations &ndash;and their national federations-- to represent professional, business, religious, gender and cultural interests;&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(B) Inclusive Economy: access to credit for all; entrepreneurship development; traditional skill development; community ownership of resources; markets that respect consumer and ecological sovereignties;&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	(C) Inclusive Environment: harmonious nature-people relationships in the context of global warming and climate change , and</div>
<div>
	&nbsp;</div>
<div>
	(D) Inclusive Polity: direct democracy; inclusive institutions &ndash;education, health, access to justice; rule of law; community leadership; empowerment of gram panchayats; modernity through local leadership and local culture ; proportional representation of communities and gender in all political parties for inclusive governance and political leadership and political space to duly elected civil society federations to be represented rotationally in the Upper House of Parliament so that short run political interests are countervailed by long-run non political civil society interests.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Finally, given all the above parameters and their variables for inclusion there is really no need for an ethnic-based Inclusive State to render justice to all and the next generations. Yes, we need an Inclusive Constitution to not exclude any. Primarily, to ensure the supremacy of the Constitution and the rule of law by having independent institutions to check the abuse of power by the political authority and guarantee accountability, transparency, competition and merit in the body politic for the larger public good.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	I submit, we do not even need a federal state. Much wiser to devolve responsibility to the 4440 VDC and 75 Districts and Municipalities for dynamic and harmonious Inclusive Growth and Development of an independent and sovereign Nepal with its territorial integrity intact.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<em><span style="font-size:11px;">(Rana is Professor South Asian Institute of Management (SAIM) and Former Finance Minister.)</span></em></div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/cs5.jpg" style="width: 525px; height: 175px; margin: 5px 25px;" /></div>
<div>
	&nbsp;</div>',
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			'created' => '2013-07-19',
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			'description' => 'It is a la mode, these days, to speak of ‘inclusive growth’ and ‘inclusive development’. In Nepal’s case, the Maoists have extended it to ‘inclusive State’: and with it the constitutional and political contours of new Nepal are yet unclear—and remain extremely contentions.',
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		'Article' => array(
			'id' => '1077',
			'article_category_id' => '40',
			'title' => 'Nepali Banking In Transition Through Mergers And IPOs',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	 </p>
<p>
	<strong>By Siromani Dhungana (with inputs from Yagya Banjade and Rashesh Vaidya)</strong></p>
<p>
	<em>As per the NRB’s latest data, the country has 31 commercial banks, 87 development banks, 80 financial companies and 21 micro-finance companies. The number shows that there is tough competition among banks and financial institutions (BFIs) forcing them to face multiple challenges. The major one is surely the capital base. The introduction of merger policy has created opportunities for banks to increase their capital base. At the same time, the BFIs are also going ahead with Initial Public Offerings (IPOs) to increase their capital base. In this issue, New Business Age tries to present an overview of how the Nepali banking sector is going about with mergers and IPOs.</em></p>
<p>
	The trend of announcing merger plans by the banks and financial institutions (BFIs) has gathered pace in recent months. According to Nepal Rastra Bank, a total of 28 banks and financial institutions (BFIs) have already merged with each other reducing the total number of BFIs by 15. Similarly, some 24 BFIs have already received Letter of Intent (LoI) to be merged with one other, and upon completion of this process, the total number of BFIs will reduce by another 14. And, other 12 BFIs have applied for the LoI. Once these too complete the process, the number of BFIs will be reduced by additional 5.</p>
<p>
	This shows that in spite of several weaknesses to implement monetary policy, Nepal Rastra Bank (NRB) has become quite successful in implementing its merger policy. Earlier, the central bank had announced packages of rebates, discounts, waivers and facilities to the BFIs opting for mergers. But now, the bankers themselves believe that merger has become compulsory for many banks which are suffering from the problem of low capital base and limited geographical coverage.</p>
<p>
	Similarly, a wave of Initial Public Offerings (IPOs) has started among the new BFIs. In the last Nepali calendar year that ended on mid-April, 20 BFIs issued IPOs, issuing shares worth Rs 5.6 billion. More offering such IPOs are in the pipeline. Though BFIs can increase their capital base also through Further Public Offering (FPO) of their shares, very few of them have opted for this route.</p>
<p>
	<strong>Need for Merger</strong></p>
<p>
	Apparently, the universal objectives of the merger or acquisition are to consolidate the capital, reduce operational expenses, expand business and maximise profits.&nbsp;</p>
<p>
	However, in our case, mergers of three distinct natures now seem to be in the offing.&nbsp;</p>
<p>
	Firstly, relatively large institutions are planning to create a larger capital base so they could compete with global players who could potentially begin their operations here owing to WTO arrangements.&nbsp;</p>
<p>
	The second type of merger would be compulsive of sorts as the NRB has asked the BFIs belonging to the same business house to integrate without any “ifs and buts’’.&nbsp;</p>
<p>
	The third types are those who fear the complete meltdown if they fail to merge soon to consolidate resources, introduce corporate best practices and reduce expenses.&nbsp;</p>
<p>
	Consolidation is becoming increasingly necessary as banks are struggling to give returns to their shareholders. Almost all BFIs are eyeing mergers, and the number of BFIs will come down notably in the next three years.</p>
<p>
	However, bankers say more incentives are needed to speed up mergers, particularly between commercial banks. For example, they have been demanding decrease in corporate income tax to 20 percent from the current 30 percent for a merged BFI.</p>
<p>
	As there is no environment for increasing capital by issuing rights shares and bonus shares as that will not be enough to raise capital to the required level, finance companies have no other&nbsp;option than to go for a merger. Many finance companies have thought that’s it’s better to opt for a merger than to face action from the central bank for failing to increase the capital to the required level next year.</p>
<p>
	Also the shaken public confidence on towards banking institutions due to recent problems in the banking sector and their inability to give proper returns to their shareholders, has forced the BFIs to increasingly lean towards consolidation.&nbsp;</p>
<p>
	Consolidation is necessary also to increase the paid-up capital since the possibility to increase of paid up capital by issuing rights shares is very slim. Moreover, the size of loans being demanded by single borrowers has been increasing in recent years. So, BFIs having low paid-up capital cannot fulfill such demand.&nbsp;</p>
<p>
	Similarly, merger becomes an urgent need also because due to the terms agreed by Nepal while gaining membership of World Trade Organisation (WTO), financail services sector is open for foreign investors beginning 2010. So, foreign banks can open their branch in nepal. If big foreign banks open their branches in Nepal, the Nepali banks with small capital base may not be competitive.</p>
<p>
	<strong style="font-size: 12px;"><span style="font-size: 12px;"><br />
	</span></strong></p>
<p>
	<strong style="font-size: 12px;"><span style="font-size: 12px;">The Journey of BFIs Mergers in Nepal So Far</span></strong></p>
<p>
	The journey of merger of Nepali banks began nine years back. In 2004, Laxmi Bank merged into it Himalayan Saving and Finance Company (HISEF), and it was done according to the broad provisions of Company Act and Bank and Financial Institution Act (BAFIA). The then Narayani Finance and National Finance had merged to become Narayani National Finance following the same Acts. Similarly, Himchuli Development Bank and Birgunj Finance merged and became H &amp; B Development Bank aalso merged under the same act.</p>
<p>
	That experience highlighted a need for special rules to govern this process. But was only in May 2011 that Nepal Rastra Bank came up with a special rule to facilitate mergers between BFIs.</p>
<p>
	When Nepal Rastra Bank (NRB) introduced the Merger By-laws in May 2011, many had still doubted whether Nepali banks and financial institutions (BFIs) would go for mergers as the concept was a relatively new for the country. &nbsp;That doubt seemed valid for some time. But soon a merger spree started among BFIs. Birgunj Finance and Himchuli Bikas Bank sought LoI from NRB in 2004 and completed their merger the same year becoming H&amp;B Development Bank. The process gained memorandum after that. (See box for the list of BFIs merged so far.)</p>
<p>
	<img alt="Nepal Rastra Bank" height="345" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_nrb.jpg" style="margin: 0 10px 0 0;" width="595" /></p>
<p>
	As the list on the box shows, most of the BFIs that have chosen to merge are development banks and finance companies merging with another institution of same category or with a commercial bank. However, latelycommercial banks too have started merging with another commercial bank. The recent such example is the merger process started by Bank of Asia Nepal and Nepal Industrial and Commercial Bank Limited.</p>
<p>
	<strong>Major Provisions of Merger By-Law</strong></p>
<ol>
	<li>
		<strong>‘A’, ‘B’ and ‘C’ class financial institutions can merge into each other. ‘D’ class FI can merge with another ‘D’ class FI only.<br />
		</strong></li>
	<li>
		<strong>FIs that want to merge should form a separate merger committee and sign Memorandum of Understanding (MoU).<br />
		</strong></li>
	<li>
		<strong>The due process including MoU should be completed before applying to the Nepal Rastra Bank (NRB)for Letter of Intent (LoI). NRB should hold a meeting within 15 days of receiving LoI application.<br />
		</strong></li>
	<li>
		<strong>NRB decides whether to issue LoI or not after conducting discussions and detailed study of concerned institutions.<br />
		</strong></li>
	<li>
		<strong>Due Diligence Audit should complete within six months of receiving LoI from the central bank.<br />
		</strong></li>
	<li>
		<strong>The detailed factual report comprising assets and liabilities of concerned institutions should be submitted to the NRB.<br />
		</strong></li>
	<li>
		<strong>Copy of the decision regarding name, address and share ratio of concerned financial institutions should be submitted to NRB.<br />
		</strong></li>
	<li>
		<strong>Action plan of concerned financial institution including date of operation after merger process is completed should be submitted to NRB.<br />
		</strong></li>
	<li>
		<strong><span style="font-size: 12px;">Other documents as prescribed by the NRB should be submitted to NRB.</span><br />
		</strong></li>
</ol>
<p>
	<strong><span style="font-size: 12px;">NRB can ask for merger if the following situation prevails:</span></strong></p>
<ol>
	<li>
		<strong>In case representatives of a family, business group, firm or company are found assuming posts in the boards of directors of two or more BFIs and/or their financial conditions remain unhealthy.</strong></li>
	<li>
		<strong>If the non-performing loans (NPL) exceeded 5 percent of the total loan portfolio for 3 consecutive years.&nbsp;</strong></li>
	<li>
		<strong>Increase in systematic risk (i.e. in a situation when a BFI seems likely to fail to meet liabilities).</strong></li>
	<li>
		<strong>If independent operation of a BFI is causing negative impact on the banking system.</strong></li>
	<li>
		<strong>If a BFI faces prompt corrective action (PCA) for three times or more.</strong></li>
	<li>
		<strong>If NRB finds that merger of systemically important BFIs will strengthen the entire banking system.</strong></li>
</ol>
<p>
	<strong>Facilities for Merger</strong></p>
<p>
	The new regulations have pledged relaxation on provisions for capital structure, shareholding limit for promoters, credit-deposit ratio, borrowings limit for promoters and deprived sector lending, among others.</p>
<p>
	If the merger causes increase in the shareholding percentage of any promoter beyond the stipulated limit, such promoters get five years time to bring down their stake within the limit.</p>
<p>
	Likewise, merged institutions are allowed additional three years to bring CD ratio down to the of 80 percent. Similarly, promoters get additional three years to bring their borrowing (loans) down to less than 50 percent of the total shares they hold in the merged BFI.</p>
<p>
	In a bid to lure BFIs to merger, the central bank has even promised a discount in refinance rate by one percentage point to the merged institution. It has also offered to lower penal rate on standing liquidity facility by half for three years in case two or more BFIs merged into one.</p>
<p>
	The central bank has also opened upgrading of &nbsp;fianancial institutions relaxed the restriction on upgrading of a BFI to encourage merger. A BFI can upgrade to higher category (category ‘C’ to ‘B’ and from ‘B’ to ‘A’) if the institution seeking to upgrade is formed through a merger).</p>
<p>
	The rules also promise to recommend to the government for exemption of taxes in case a BFI faces losses during the course of merger facilities include the time duration of using SLF will be expanded to 30 days from the existing 5 days for three years after completion of merger process. NRB can provide other facilities according to the need of the banks.&nbsp;</p>
<p>
	<strong>Challenges of Transition</strong></p>
<p>
	Most of the consumers do not get sense of transition of banks merger because in an ideal case, all banking services continue to function normally even during the transition. ATM cards work, checks consumers write do not bounce and consumers will be able to get the all services.&nbsp;</p>
<p>
	&nbsp;However, banks face several problems during the transition. Among others major challenges of merger are as mentioned below:</p>
<p>
	<strong>1. Brand Name</strong></p>
<p>
	The identity of the institution in the market is through the brand name. The image of an entity is joining with a brand image. So, the settlement in the brand name of the newly formed merged entity is essential.</p>
<p>
	<strong>2. Composition of board of directors (BoD) and shareholders</strong></p>
<p>
	The major decision makers in any entity are the board of directors and the shareholders. If the disputes arise among these people, the performance as well as the future of the entity will be directly hampered. So, the number as well as the persons that should represent at the BoD should be settled in cool mind.</p>
<p>
	<strong>3. Structure of the new management team</strong></p>
<p>
	The new merged entity comprises of the management team from two or more different entities. So, clear visions should be set-up for making the new management team which could handle the merged organization in coming days.</p>
<p>
	<strong>4. Employees Management</strong></p>
<p>
	As the organization is merged, at the same time the employees also come together. The major assets any organization is human resources. So, if the merged entity can not handle properly the grievances of the employees, the situation of disputes may arise. &nbsp;</p>
<p>
	<strong>5. Ownership Division</strong></p>
<p>
	The problem of division among the ownership might arise in the merged entity. The questions of shareholding as well as takeover of the share equity might create division among the shareholders. &nbsp;</p>
<p>
	<strong>6. Banking Software</strong></p>
<p>
	Various types of software are being used by the BFIs for the smooth operation. Huge cost and efforts had been gone in maintain the software in an organization. But if the two different entities are using two different types of banking software, the problem as well as cost may arise in the settlement of the books of accounts.</p>
<p>
	 </p>
<p>
	<strong>Need of Separate Acquisition Law</strong></p>
<p>
	Acquisition is, however, yet to come under the legal regime in the country. The central bank has said that it has been doing necessary preparations to introduce a separate legal mechanism on acquisition to encourage consolidation of the financial sector. Acquisition of financial institutions is difficult at present since there is no related legal provision, says CEO of Kailash Bikas Bank Krishna Raj Lamichhane who is also the president of Development Bankers Association.</p>
<p>
	NRB officials say that about half a dozen banks had held talks with the central bank about the possibility of acquiring regional development banks and finance companies to reach out to new areas. Acquisition is a relatively faster process as the challenges of merger such as it can be done once the buyer and the seller reach an agreement. Bankers say the introduction of legal provisions for acquisition will help bring down the number of BFIs in the country. The central bank needs to be careful while issuing new licenses and also the ability for smaller banks to withstand the economic crisis.</p>
<p>
	<strong>IPO Attraction</strong></p>
<p>
	The Nepali investors have been showing very encouraging response to the IPO of the company, especially of commercial banks. The data of Securities Board of Nepal (Sebon) reveals that 22 companies have got approval for the IPO from mid July 2012 to till the mid May of 2013. Shares worth of Rs 5.78 billion came in the market during this period. Of the total 22 companies, eight development banks, eight commercial banks, three finance companies, one insurance company and one hydro-power company.</p>
<p>
	<strong>The Direction Ahead</strong></p>
<p>
	The foremost challenge to the country’s banking sector in the realm of merger of banks is to create an environment where major financial institutions will go for merger voluntarily, says Upendra Paudyal, vice-president of Nepal Bankers Association (NBA).</p>
<p>
	The overall financial health of merged institutions has been found to be improved so far, he opines, saying the primary intention of the merger should be to strengthen capacity of concerned banks and financial institutions.&nbsp;</p>
<p>
	The policy taken by the Nepal Rastra Bank has resulted in positive signs since the market players in the arena of banks and financial institutions have saturated, adds Paudyal says. “Merger bylaws have played very crucial role in lowering the number of BFIs.”&nbsp;</p>
<p>
	But there is a question about the way forward of merger in the banking sector. The mathematical aspect has been highlighted so far by both the government and the BFIs, Paudyal says. It is cultural aspect which largely determines the success of merger. Sincere effort from all concerned parties is a must to make a merger journey a great success in the counry, he concludes.</p>
<p>
	&nbsp;&nbsp;</p>
<hr />
<p>
	<strong>In Nutshell</strong></p>
<p>
	The first case of merger between BFIs in Nepal was the merger of HISEF Finance Ltd into Laxmi Bank Ltd in 2004</p>
<p>
	<strong>BFIs that have merged already</strong></p>
<ul>
	<li>
		Himchuli Development Bank &amp; Birgunj Finance forming H&amp;B Development Bank Ltd</li>
	<li>
		Narayani Finance &amp; National Finance forming Narayani National Finance</li>
	<li>
		Nepal Bangladesh Bank &amp; Nepal-Sri Lanka Merchant Bank forming Nepal Bangladesh Bank Ltd</li>
	<li>
		Kasthamandap Development Bank &amp; Shikhar Finance forming Kasthamandap Development Bank Ltd</li>
	<li>
		Business Development Bank &amp; Universal Finance forming Business Universal Development Bank Ltd</li>
	<li>
		Machhapuchchhre Bank &amp; Standard Finance forming Machhapuchchhre Bank Ltd</li>
	<li>
		Global Bank &amp; IME Financial Institution &amp; Lord Buddha Finance forming Global IME Bank Ltd</li>
	<li>
		Infrastructure Development Bank &amp; Swastik Merchant Finance forming Infrastructure Development Bank Ltd</li>
	<li>
		Annapurna Development Bank &amp; Suryadarshan Finance forming Supreme Development Bank Ltd</li>
	<li>
		Vibor Bikas Bank &amp; Bhajuratna Finance forming Vibor Bikas Bank Ltd</li>
	<li>
		Alpic Everest Finance &amp; Butwal Finance &amp; CMB Finance forming Synergy Finance Co Ltd</li>
	<li>
		Shine Development Bank &amp; Resunga Development Bank forming Shine Resunga Development Bank</li>
	<li>
		Pashupati Development Bank &amp; Udyam Development Bank forming Axis Development Bank Ltd</li>
	<li>
		Prudential Finance &amp; Gorkha Finance forming Prudential Finance Company Ltd</li>
	<li>
		NIC Bank &amp; Bank of Asia forming NIC Asia Bank Ltd (Process ongoing)</li>
</ul>
<p>
	<strong>Letter of Intent (LoI) Received &nbsp; &nbsp;&nbsp;</strong></p>
<ul>
	<li>
		Premier Finance &amp; Imperial Finance to form Premier Imperial Finance</li>
	<li>
		Royal Merchant Banking and Finance, Rara Bikas Bank &amp; Api Finance</li>
	<li>
		Araniko Development Bank &amp; Surya Development Bank</li>
	<li>
		Central Finance Ltd &amp; Patan Finance Ltd</li>
	<li>
		Diyalo Bikas Bank Ltd &amp; Professional Bikas Bank Ltd</li>
	<li>
		NDEP Development Bank &amp; Hama Finance Ltd</li>
	<li>
		Siddhatha Development Bank &amp; Public Development Bank Ltd</li>
	<li>
		Five Regional Development Bank to form One National Level Gramin Bikas Bank</li>
	<li>
		Shangrila Development Bank Ltd &amp; Bagheshwor Development Bank</li>
</ul>
<p>
	<strong>LoI In Pipeline&nbsp;</strong></p>
<ul>
	<li>
		Lalitpur Finance Ltd &nbsp;&amp; Progressive Finance Ltd</li>
	<li>
		Sagarmatha Merchant and Finance Ltd &nbsp;&amp; Reliance Finance Ltd</li>
	<li>
		Social Development Bank &amp; Corporate Development Bank</li>
	<li>
		Vibor Bikas Bank &amp; Kist Bank Ltd</li>
	<li>
		Manakamana Development Bank Ltd, Infrastructure Development Bank, Yeti Finance Limited &amp; Valley Finance Ltd.&nbsp;</li>
	<li>
		Khadbari Bikas Bank &amp; Birat Laxmi Finance</li>
	<li>
		Global IME Bank &amp; Social Development Bank Ltd.</li>
</ul>
<p>
	<strong>Merger Process Dumped</strong></p>
<ul>
	<li>
		Kathmandu Finance Ltd &amp; Civil Merchant Bittiya Sanstha Ltd</li>
</ul>
<div>
	<hr />
</div>
<p>
	<strong><span style="font-size: 12px;">Financial Indicators of the Merged Entities</span></strong></p>
<div>
	<p>
		The major financial indicators of the merged entities have slightly improved compared to the pre-merger situation.&nbsp;</p>
	<p>
		Machhapuchhre Bank Ltd (MBL) had a higher level of non-performing loan (NPL) before merger than of the Standard Finance Limited (SFL). The NPL of MBL was at 2.84 percent whereas; the NPL of SFL was at 0.73 percent. After the merger, the NPL of MBL stood at 2.73 percent according to the financial report for mid-July 2012.</p>
	<p>
		The Credit Deposit (CD) Ratio of SFL was very high at 104.27 percent whereas, the ratio was at good level at 74.62 percent for MBL before merger. &nbsp;After the merger the CD ratio of MBL was maintained at 73.07 &nbsp; percent. But the Return on Assets (ROA) declined below one percent.</p>
	<p>
		&nbsp;Among the three merged entities in Global IME Bank Ltd, the financial performance of Lord Buddha Finance Ltd was not good. Its Capital Adequacy Ratio (CAR) was very high at 33.76 percent. &nbsp;Similarly, the NPL and ROA of the finance company were at 3.99 percent and -0.61 percent respectively. The NPL of merged entity, Global IME Bank Ltd stands at 1.54 percent as of the third quarter report of the FY 2012-13. At the same time the ROA is at 1.13 percent.</p>
	<p>
		Similarly, in Vibor Bikas Bank after merger of Bhajuratna Finance &amp; Saving Co. Ltd. has a high level of CAR at 14.42 percent but at the same time the level of NPL has increased to 32.63 percent till the third quarter of the F/Y 2012-13. The ROA of the bank is also seen negative. It is at -1.95 percent.&nbsp;</p>
	<p>
		Vibor Bikas Bank is again going ahead with a proposal of merger with Kist Bank Ltd. &nbsp;The NPL of the Kist Bank Ltd is seen comparatively lower than of the Vibor Bikas Bank. The ratio was at 32.63 percent and 7.89 percent for Vibor Bikas Bank and Kist Bank respectively as of third quarter of the F/Y 2012-13. &nbsp;Both the banks have posted the negative ROA during the third quarter of the FY 2012-13. Similarly, Vibor Bikas Bank has not been able to maintain the good level of CD ratio during the period.</p>
	<p>
		Recently, Bank of Asia Nepal Ltd and NIC Bank Ltd have received LoI from NRB for merger. The banks have already announced a plan to publish their combined financial report of the fourth quarter of F/Y 2012-13 in the name of the merged entity, NIC Asia Bank Ltd. Both the banks’ indicators show that they are in a financially sound position. After the merger they are likely to emerge even stronger in the banking market.</p>
	<p>
		<img alt="Financial Indicators of Some Merged and to be Merged BFIs:" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_financial_indicators.jpg" style="margin:0 10px 0 0;" /></p>
</div>
<div>
	<hr />
	<p>
		<strong style="font-size: 12px;"><span style="font-size: 12px;"><br />
		</span></strong></p>
	<p>
		<strong style="font-size: 12px;"><span style="font-size: 12px;">‘Merger is a need of the entire financial system’</span></strong></p>
	<p>
		 </p>
	<p>
		<strong><img alt="Bhaskar Mani Gyawali, Spokesperson, NRB" height="240" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_bhaskar.jpg" style="float:left; margin:0 10px 0 0;" width="200" />What &nbsp;is the situation of merger in the banking and financial Institutions (BFIs)?</strong></p>
	<p>
		The trend of merger in BFIs has grown lately. &nbsp;After the introduction of Merger Bylaws in 2011 by Nepal Rastra Bank (NRB), 22 financial institutions merged to become 10 within a year. This is very encouraging.</p>
	<p>
		<strong>Why is there a need for merger in the financial market?&nbsp;</strong></p>
	<p>
		Financial institutions have mushroomed in the country, thanks to the liberal policies adopted by Nepal Rastra Bank in the past. Given the size of our financial system, the number of BFIs looks more than normal. Many of these institutions had invested in the real estate sector without any long-term benefits. NRB was forced to fix a ceiling on real estate investment by banks after a surge in the volume of nonperforming loans.</p>
	<p>
		Investment by financial institutions in unproductive sectors caused a liquidity crisis in the market. These institutions also failed to maintain corporate governance. &nbsp;Financial institutions should be able to return money to depositors as required. NRB had introduced Merger Bylaws 2011 to improve the condition of financial institutions.</p>
	<p>
		<strong>Why are there no expected improvements in merged institutions?</strong></p>
	<p>
		Merged organizations are much improved in comparison to single and troublesome financial institutions. The process of merger has helped institutions increase their capital base and ability to return the people’s money.&nbsp;</p>
	<p>
		<strong>Can you briefly tell us the merger process?</strong></p>
	<p>
		Merger is a need of the entire financial system of Nepal. The share swap ratio is obviously an issue of tension in the pre-merger phase. NRB provides counseling services to all institutions which want to go for merger. The process is very simple. At first, the BFIs should take the special decision of merger thorough the General Meeting of shareholders. Then they should sign a Memorandum of Understanding (MoU) for merger. Then, after forming a merger committee, they should apply to the central bank for the Letter of Intent. NRB conducts interaction with concerned stakeholders and provides insights including strengths and weaknesses of the merging BFIs. If BFIs want to continue the merger process even after the interaction, NRB approves the LoI. Concerned financial institutions should approve new structure which will come into effect after the completion of the merger process.</p>
	<p>
		&nbsp;NRB should always deal the entire merger process carefully because merger should not promote monopolistic business.</p>
	<p>
		<strong>What are the post-merger complications? Does NRB intervene if complications arise in the post-merger phase?</strong></p>
	<p>
		Some minor complications are inevitable in the post-merger phase. Salary disputes, implementation of new structure and other managerial work create several complications. NRB provides the necessary assistance if the situation so demands. Similarly, the central bank may opt for positive intervention if the post-merger complications start to hurt the entire transactions of the concerned BFI.</p>
	<p>
		<strong>Are the BFIs reluctant for mergers?</strong></p>
	<p>
		Definitely not. But merger is a complex process. Two or more institutions can opt for a merger when they develop a sense of mutual trust. Many chiefs have to agree to make one chief. Jumbo administrative committees have to be downsized. The present scenario of mergers is pretty exciting.</p>
	<p>
		<strong>Is merger a less attractive proposition because of the low incentives for the same?&nbsp;</strong></p>
	<p>
		First, organizations should be aware about the merger process. They should be aware that merger is not for NRB but for them. This is because it is their responsibility to make the organization stronger and sustainable. Providing different incentives and schemes to organizations is like luring a child by giving them chocolates. It is unnecessary to entice them like that.&nbsp;</p>
	<p>
		<strong>The incentives provided to the merging institutions have been discontinued. What about reintroducing these insentives to the institutions that will merge now ?</strong></p>
	<p>
		NRB couldn’t continue the facility because of the incomplete budget. &nbsp;As soon as we have a full budget, NRB will renstate these facilities. The central bank is committed to facilitate the merger process.&nbsp;</p>
	<p>
		<strong>Where has NRB’s preparation regarding bylaws related to acquisition reached?</strong></p>
	<p>
		Legally, BFIs &nbsp;which want to acquire the stake of any &nbsp;other financial institution can do so. The only difficulty is that NRB does not have any specific guideline and legal provision to tackle the issue of acquisition. NRB, however, is very supportive if any financial institution wants to acquire the stakes of other institution.</p>
	<p>
		<strong>Is NRB considering forced mergers?</strong></p>
	<p>
		 </p>
	<p>
		NRB is not for forced mergers because there is a need for mutual bonding in order to operate the merged entity smoothly. But NRB might force institutions which are in miserable financial status and cannot improve the same over a period of time.</p>
</div>
<div>
	<hr />
</div>
<p>
	<strong>Initial Public Offering in Banking Sector</strong></p>
<p>
	<strong><br />
	</strong></p>
<p>
	<img alt="Niraj Giri" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_niraj.jpg" style="float:left; margin:0 10px 0 0;" width="200" />The capital market is a mechanism created to facilitate the exchange of financial assets with a maturity period of more than a year. It is a broad term embracing the buyers and sellers of securities and all the agencies that assist the sale and resale of securities.&nbsp;</p>
<p>
	Capital market activities started in Nepal in 1937 with the issuance of the shares of Biratnagar Jute Mills Ltd. However, a more structured market activity started with the establishment of a stock trading mechanism in 1976 along with the establishment of the Securities Exchange Center. Enactment of the Securities Act and establishment of the Securities Board in 1983 gave the impetus for the development of capital market in Nepal in a more organized manner. In the early 90s after the success of the first People’s Movement, the government adopted liberal economic policies and opened up various areas to the private sector. This paved the way for the entry of private banks into the country’s financial market.&nbsp;</p>
<p>
	With the opening up of the economy, banks and financial institutions (BFIs) from the private sector have been in the forefront of making initial public offerings (IPOs). The IPOs of BFIs are also the most sought-after IPOs in the secondary market. In fact, most of the trading that takes place in the secondary market is that of the shares of companies from the banking and financial sector. So, this sector has played a major role in the development of our capital market., the number of companies listed at Nepal Stock Exchange (NEPSE) as of May 17, 2013 was 224 of which 29 are commercial banks and 142 development banks and finance companies. Besides, 68 per cent of the daily trade at NEPSE is of the shares of commercial banks. This shows that the secondary market in Nepal is highly dominated by the banking sector. Why is this sector so dominant?</p>
<p>
	There are various reasons. First and foremost is the licensing requirement of Nepal Rastra Bank (NRB), the central bank. NRB has made it mandatory for BFIs to issue their shares to the public. BFIs have to go for IPOs within two years of obtaining the operating license from the central bank. Besides, in IPOs, funds flow from the provider to the user. This means the contribution of IPOs to financing companies is direct in the sense that it provides them with additional funds for either starting a new business or expanding or diversifying the existing ones. This might not sound true for banking sector companies. However, IPOs fetch them funds which they can use to lend or to meet the various other requirements such as capital requirement set forth by the regulator. IPO also gives the public investors a partial ownership of the company and an opportunity to be represented at its board of directors. This representation of public directors in the board helps to bring about transparency and good governance at the higher echelon of the company.</p>
<p>
	When Janata Bank Ltd &nbsp;issued an IPO worth Rs 600 million last year, it was believed that the bank had ill-timed the issuance as the secondary market indicator, the NEPSE index, was bearish. &nbsp;Investors were pulling out of &nbsp;the secondary market and the merchant bankers related with the IPOs, too, were worried about the subscription. However, when the IPO closed, the issuance had been oversubscribed by 2.43 times. This showed that the investors still had confidence in the IPOs of commercial banks. The IPO of Janata Bank was followed by that of Civil Bank Ltd which &nbsp;issued an IPO worth Rs 800 million which, in turn, was oversubscribed by 6.38 times. Recently, Commertz &amp; Trust Bank Ltd made an IPO worth Rs 600 million which was oversubscribed by 11.64 times. During the same period, IPOs of some development banks and finance companies were undersubscribed or even cancelled.&nbsp;</p>
<p>
	NRB has put a lot of emphasis on good corporate governance practices in the banking sector and banks are under constant supervision of the central bank. Barring a few, most banks have been giving good returns, in terms of cash dividend and bonus shares to their investors. The investors, too, have benefitted from a higher capital gain from the trading of shares of banks, compared to those of companies from other sectors. There is also a belief amongst the investors that commercial banks do not fail. This has boosted the investors’ confidence in banking stocks.&nbsp;</p>
<p>
	Both the government and the central bank have been persuading the BFIs for mergers in order to strengthen the banks and consolidate the growth of the financial sector. Some financial institutions have opted for merger and the effects of this will be seen on the market in the coming days. Though difficult, mergers will definitely strengthen the banks' capital base and enhance their operational efficiency through synergic effects. This, in turn, will attract more investors to banking stocks.&nbsp;</p>
<p>
	<span style="font-size:10px;">(The author is a Director at SEBON)</span></p>
<div>
	<hr />
</div>
<p>
	<strong>Problems of Merger</strong></p>
<p>
	<strong><br />
	</strong></p>
<p>
	<img alt="Krishna Raj Lamichhane" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_krishna.jpg" style="float:left; margin:0 10px 0 0;" width="200" />The country’s banks and financial sector witnessed a significant change with the introduction of merger bylaw by Nepal Rastra Bank (NRB), the central regulatory body of banks and financial institutions (BFIs). The bylaw has provided unique opportunities to BFIs to overcome the problem of capital inadequacy.</p>
<p>
	Nepal Rastra bank enacted merger bylaw in 2011 and the pace of merger have accelerated after that. The reasons of mergers among banks and financial institution is obvious, they want expand their presence in the market. Some major reasons of merger are as mentioned below:</p>
<p>
	<strong>Increase capital base:</strong> The reason of most of the mergers is that banks want to increase their capital base. The central bank has urged banks to enhance capital base to expand their services into the urban areas especially in the capital.</p>
<p>
	<strong>Expand services: </strong>Banking consolidation helps concerned institutions expand their services. For instance, merger provides opportunities of utilizing each other’s brand and public relation jointly. Banks and financial institutions can expand their services after increasing their capital base. Similarly, merger helps banks to increase investment capacity that will make them capable of investing in huge projects.</p>
<p>
	<strong>Implementing new and innovative ideas: </strong>Banking consolidation through merger will allow BFIs to explore chances of coming up with innovative ideas. Together, the banks and financial institutions can enhance their operation system and implement effective management.</p>
<p>
	However, the process of merging of banks and financial institutions is not free of hassles. There are basically two types of hassles to complete the merger process: i) external or created by the regulator and ii) internal or the managerial problems within banks and financial institutions.</p>
<p>
	At present, the central bank has made it mandatory to stop trade of shares after starting the merger process which, I think, should be changed. I do not see any logic and rationale behind this provision.&nbsp;</p>
<p>
	Similarly, the government does not provide any facility to the banks and financial institutions which want to be merged. I feel that the government should reduce corporate tax to 25 per cent from existing 30 per cent for five years after merger process complete. It is necessary because BFIs should invest huge chunks of money in managerial activities to complete the merger process. It is really challenging to ensure smooth transition and resolution of conflict likely to surface among the staff due to hostility, ego clashes or layoffs during the merger process.</p>
<p>
	It is a fact that the existing merger process between various financial institutions seem to be more forceful in nature. I do not mean that the Nepal Rastra Bank has put any pressure for mergers but the circumstances have made BFIs merge. I think the government should create an environment where banks and financial institutions voluntarily show their readiness to be merged.</p>
<p>
	<span style="font-size:10px;">(Writer is Chairman of Development Bankers Association and CEO at Kailash Bikash Bank)</span></p>
<div>
	<hr />
</div>
<div>
	<div>
		<strong>Merger and Its Challenges</strong></div>
</div>
<div>
	<strong><br />
	</strong></div>
<p>
	<img alt="Guru Prasad Paudel" height="270" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_june2013_nepali_banking_in_transition_through_mergers_and_ipos_guru_prasad.jpg" style="float:left; margin:0 10px 0 0;" width="200" />Business organizations can combine with each other in a various ways. One of the most common approaches is Mergers and Acquisition (M&amp;A), which combine independent firms under common control. After unveiling a merger bylaw, the practices of M&amp;A in Nepali banking sector has been increasing tremendously. Around two dozen BFIs merged each other and created 13 institutions. More than two dozen BFIs have got the letter of intent (LOI) to go for the merger. Even if merger has been practiced in the financial sector to cope the various issues, there has been no real academic effort to extensively appraise how employees are reacting, adapting and coping with the new realities in the post– merger period as well as how BFIs are achieving their business targets.&nbsp;</p>
<p>
	Furthermore, we should not forget that in achieving the objective of BFIs merger, quite a number of intrinsic risk factors may be involved both during and post merger period which should have to be address by regulators as well as by bank BOD and senior management level.&nbsp;</p>
<p>
	Literature says, merger that has been practiced internationally is not less challenging. Some inherent features of merger as well as some country specific problems add more challenges in it. In the past, tangible aspects (e.g. capital, raw materials, equipment etc.) were the major issues of merger. Now the scenario has changed, and intangible aspects (e.g., human capital, culture, knowledge, goodwill, brand etc) are emerging as key challenges. &nbsp;</p>
<p>
	We adopted merger strategy very lately; though it has more than 120 years long history internationally. Nepal dose not have separate Act about M&amp;A, so there may arise some legal risk in the future. Today, large BFIs desire to acquire small financial institutions but we have no Acquisition provisions. M&amp;A is significantly affected by the geo-political condition of the country. Present situation of our country is unfavurable for mergers because of the rise in concept of divergence and dissolution, which is a serious external threat for merger. Lack of specific Act and provisions regarding acquisitions and geo-political scenario are major challenges. Besides these, some challenges and problems are as follows:&nbsp;</p>
<ul>
	<li>
		Top executives and top level management team may leave unexpectedly. When they leave the merged organization the expected synergy will be evaporated.</li>
	<li>
		Expected synergies evaporate also because of cultural differences. Research says only 23 percent of all M&amp;A earn their cost of capital.</li>
	<li>
		Data migration plays vital role in the merger, sometimes this single task will be multi-time expensive than other factors of merger.&nbsp;</li>
	<li>
		Expenses get increased because of disposal of old stationeries, write-off provisions of duplicated branches.&nbsp;</li>
	<li>
		Power politics can be a major obstacle to the success of M&amp;A.</li>
	<li>
		Agency problem is another key challenge of M&amp;A.</li>
	<li>
		Who are going to leave from the BOD &nbsp;will be an anxious issue.&nbsp;</li>
	<li>
		It further creates anxiety while selecting CEO or top level management officials because the institutions undergoing merger have their own individual CEO or higher management authorities.&nbsp;</li>
	<li>
		Due Diligence Audit Report (DDAR) does not give accurate price of the institutions hidden contingent liabilities may get added which further enhance the challenge in the merger.&nbsp;</li>
	<li>
		Management of employee of duplicated branches is yet another high value expense occurred due to merger.</li>
</ul>
<p>
	<span style="font-size:10px;">(Writer is Deputy Director at Nepal Rastra Bank. The views expressed here do not necessarily represent the views of NRB)</span></p>
<div>
	 </div>',
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			'created' => '2013-06-07',
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			'keywords' => 'Nepali Banking In Transition Through Mergers And IPOs, Cover story, Banking, Mergers, New Business Age, June 2013',
			'description' => 'As per the NRB’s latest data, the country has 31 commercial banks, 87 development banks, 80 financial companies and 21 micro-finance companies. The number shows that there is tough competition among banks and financial institutions (BFIs) forcing them to face multiple challenges. The major one is surely the capital base.',
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			'id' => '1000',
			'article_category_id' => '40',
			'title' => 'Revisiting Nepali Consumers: Facts, Trends & Business Impacts',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="font-size: 12px;">Many believe that Nepal is still an under-explored market given the potential it has. The market is growing and chances of further expansion are still very high due to the increased awareness and affordability of consumers. The world’s leading brands available in Nepal have created an environment in which consumers can expect to get what they want. &nbsp;Every product has been putting their effort to get a hold in the market by expanding their consumer-base.&nbsp;</strong></p>
<p>
	<strong>Based on Purchasing Power Parity (PPP) Nepal’s Per Capita Income has doubled in 32 years. Recently released Human Development Report 2013 by the United Nations Development Program (UNDP) has revealed that the gross national income (GNI) per capita in PPP increased by 101 percent to US$ 1,137 in 2012 compared to 1980. Inflow of remittance and an large portion of youth population has made Nepal a potential market to companies.</strong></p>
<p>
	<strong>In this issue, New Business Age provides marketers and companies with some interesting insights to know the changing consumers landscape in Nepal.</strong></p>
<p>
	<span style="font-size: 12px;">In the capital Kathmandu, varieties of goods and shopping places can be found within a few minutes from their homes. People can find products according to their affordability. There are varieties of price ranges and choices to consumers. Family run groceries are still the norm in Nepal, but supermarkets and malls are also doing good business.&nbsp;</span></p>
<p>
	Despite economic slowdown, the consumption of fast-moving consumer goods (FMCGs) has not dropped but constantly going up. Nepal has been witnessing satisfactory growth in per capita food and non-food consumption expenditure. Household consumption of fast moving consumer goods (FMCGs) has also gone up. Multiple factors have contributed in expansion of Nepal’s market.&nbsp;</p>
<p>
	The visible growth of Nepal’s economy, especially income of the people, over the last decade has put more money in the pockets of the country’s middle class, prompting retailers to target this group of consumers.&nbsp;</p>
<p>
	<strong>Census 2011</strong></p>
<p>
	In the report of National Population and Housing Census 2011 published by the CBS, the population of the country has grown to 26.6 million with 1.35 percent annual growth rate since the last census that was concluded in 2001.</p>
<p>
	Thus, Nepal is the market of 26.6 million consumers including 12.8 million male population and 13.64 female. The census report shows that Terai region constitutes of 50.27 percent (13.31 million) of the total population. Similarly, hilly and mountain areas constitute 43 percent (11.39 million) and 6.73 percent (1,781,792) respectively.</p>
<p>
	Highlights:</p>
<ul>
	<li>
		Population: 26,494,505</li>
	<li>
		Households: 5,427,30</li>
	<li>
		Average household size: 4.88</li>
	<li>
		Sex ratio (number of males per 100 females): 94.2 (Number of male per 100 female)</li>
	<li>
		Urban population: 17 per cent</li>
	<li>
		Population density (average number of population per square km): 180</li>
</ul>
<p>
	<strong>Age Groups and Corresponding Market</strong></p>
<p>
	The age of the consumer determines the type of products sellable in the market.&nbsp;</p>
<p>
	Normally, a young person is fashion conscious in the choice of products, while a middle-aged person is status conscious.</p>
<p>
	The age group of 10-14 years of the population is seen the highest (when compared to other 5-year gap intervals) in Nepal as per the 2011 census data. Also, the female population is slightly more than that of males. There are 13,645,463 women in Nepal, which accounts for 51.5 percent of the total population, while the number of males is 12.84 million. &nbsp;Higher population of women shows that the market of cosmetics items, clothing and boutiques are very good in the country.&nbsp;</p>
<p>
	<img alt="Age Groups and Corresponding Market, Cover Story, Revisiting Nepali Consumers" height="304" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_age_group_and_corresponding_market.jpg" width="506" /></p>
<p>
	<strong>Youth Population</strong></p>
<p>
	The census data shows that more than half of the population, about 55 per cent, is below 25 years of age. According to the 2011 census report, some 34.91 per cent of the population is aged below 14 years and another 19.97 per cent is aged between 15-24 years.</p>
<p>
	This is one of the reasons why many world players are coming and establishing their presence here in the Nepali market. Young Nepalis today expect a lot more from their lives, and often face pressure that was unfamiliar to earlier generations. Young people often want to keep up with global fashions and market trends. Their passion of following global fashion and trends has created many opportunities in Nepali market. Though Nepali population is mostly young, the size of old-age population has been increasing as well offering increased opportunity for business that provide goods and services to aged.&nbsp;</p>
<p>
	<strong>Family Size and the Family Life Cycle</strong></p>
<p>
	The buying decision in a large family is more complex as several individuals play different buying roles, such as that of initiator, influencer, prayer, buyer and users, economist Dr Chiranjivi Nepal says. He opines that the large families generally buy a single brand while small families are found to be more brand-switching. Consumers’ product varies according to the stage of their family life cycle. The consumption pattern of a bachelor is different from that of a man with several children.</p>
<p>
	The average household size of Nepal is 4.88 as per the 2011 census data. The household size of the urban and rural was seen 4.32 and 5.02 respectively. The largest household size was seen in Rautahat district with 6.44 and the lowest of 3.92 in Kaski district.</p>
<p>
	<strong>Remittance</strong></p>
<p>
	Around 1,500 Nepali workers go abroad for employment every day and it is their remittance that keeps the Nepali economy afloat, opines economist Nepal.&nbsp;</p>
<p>
	According to the World Bank, Nepal ranked 6th in the world among top remittance-receiving countries in 2011, with remittances making up 20 per cent of its GDP. A total of 56 per cent of the total households in Nepal receive remittances. Of which, 48 per cent comes from international labour migration, according to Central Bureau of Statistics. Accounting for more than 20 per cent of the GDP, migrant labourers brought in Rs 359 billion in the last fiscal year alone.</p>
<p>
	<img alt="Remittance, Revisiting Nepali Consumers" height="206" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_remittance.jpg" width="515" /></p>
<p>
	<strong>Education</strong></p>
<p>
	Of the total population, 39.04 percent are at the level of primary education. The male population dominated all the regions of the country in the literacy level. 65.94 per cent of the total population are literate (can read and write) in Nepal. &nbsp;2.52 percent of the population of Nepal can read only as per census data. Kathmandu has the highest literacy rate and Humla, the lowest with 86.3 per cent and 47.8 per cent respectively. The school enrollment of Nepal is seen at 95.1 per cent as per census data. This means over 95 per cent of school going age population is actually enrolled in schools. This indicates to very good market for educational material and education-related services.</p>
<p>
	<img alt="Population Aged 5 years and above by Literacy Status, Revisiting Nepali Consumers, Cover Story" height="215" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_population_5years_above_literacy_status.jpg" width="528" /></p>
<p>
	<strong>Toilet Use</strong></p>
<p>
	More than one-third, i.e., 38.17 per cent of the Nepali population does not have toilet facility. In Terai region, a total of 51.24 per cent of population are still without toilet facility.&nbsp;</p>
<p>
	However, the trend of constructing the flush toilet and squat toilet with septic tank is increasing in the country including both in the rural as well as in urban areas. Therefore, the business of sanitary ware has also been going up.&nbsp;</p>
<p>
	<img alt="Toilet Use, Revisiting Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_toilet_use.jpg" /></p>
<p>
	<strong>Rural Market&nbsp;</strong></p>
<p>
	Though the business volume may be big in Kathmandu and urban areas, Nepali villages offer very good markets in terms of the number of consumers as about 82.30 per cent of the population of the country is living in rural areas.&nbsp;</p>
<p>
	Interestingly even some parts of the urban population &nbsp;have rural consumption behaviour. And urban characters can be seen also in some rural areas due to the influence of remittance, for example. However, purchasing capacity of rural community is low compared to urban population. Rural population still depends on agricultural activities. The consumption habit, however, has been changing in the rural areas too. One reason is the road access and the other is education. Also the availability of electricity and cable TV as well as opening of cinema halls in those rural areas have been changing the consumption habit in rural Nepal.</p>
<p>
	Many companies have been launching products targeting the rural population. Comparatively low-cost products and micro-packing are main strategies adopted by companies to get a hold in rural areas.&nbsp;</p>
<p>
	<img alt="Rural Market, Revisiting Nepali Consumers, Cover Story" height="86" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_rural_market.jpg" width="390" /></p>
<p>
	 </p>
<p>
	<strong>Fuel</strong></p>
<p>
	According to National Population Census 2011, Nepal still relies heavily on firewood to fulfill its fuel demand for the purpose of cooking. However, the consumption of Liquefied Petroleum Gas (LPG) has significantly increased in the recent years which has created lots of space for the business of LPG stoves, regulators, pipes, cylinders and other necessary accessories.&nbsp;</p>
<p>
	One interesting fact about source of fuel for cooking is that big urban districts like those in the capital (except Lalitpur), Parsa, Kaski and Morang do not feature among the top users of electricity. Obviously the frequent power outage and cheap price of LP Gas have prompted the households ot shift to LP Gas in those districts.</p>
<p>
	<img alt="Fuel, Revisiting Nepali Consumers, Cover Story" height="717" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_fuel(1).jpg" width="389" /></p>
<p>
	<strong>Lighting Sources</strong></p>
<p>
	Electricity is seen as the major source of lighting for Nepali households. Total of 67.26 percent of the population is using electricity as the source of lighting. Similarly, kerosene is the second major source of lighting (18.28 per cent). But these households suffer from frequent power outage.</p>
<p>
	This has created much opportunities for the traders of invertors and batteries as well as solar power systems.</p>
<p>
	Therefore, business of electricity accessories such as bulbs, wires, poles and ceiling lights is doing well in Nepali market. At the same time, business of solar energy has also gone up and possibility of bio-gas related business is also very high in the Nepali market.&nbsp;</p>
<p>
	<strong><img alt="Lighting Sources, Revisiting Nepali Consumers, Cover Story" height="607" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_lightening_sources.jpg" width="385" /><br />
	</strong></p>
<p>
	<strong>Religious Cultural Factors</strong></p>
<p>
	In September 2012, World’s famous fast food chain McDonalds launched its first vegetarian restaurants in India targeting Indian Hindu. The reason of launching vegetarian products was obvious that McDonalds did not want to lose Hindu consumers.&nbsp;</p>
<p>
	Cut-throat competition among various companies and outlets has created a scenario whereby all companies try to lure consumers by offering what they want. Nepal is multi-religion country and companies may want to tap consumers according to religion.&nbsp;</p>
<p>
	Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services.&nbsp;</p>
<p>
	<img alt="Religious Cultural Factors, Revisitng Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_religious_cultural_factors.jpg" /></p>
<p>
	<img alt="Cultural Composition, Revisiting Nepali Consumers, Cover Story" height="393" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_religious_cultural_composition.jpg" width="496" /></p>
<p>
	<strong>Absent Population</strong></p>
<p>
	One in every four households (25.42%; 1.38 million households) reported that at least one member of their household is absent or is living out of country. Total number of absent population is found to be 1,921,494 in 2011 census against 762,181 in 2001. The highest proportion (44.81 percent) of absent population is from the age group 15 to 24 years. Gulmi, Arghakhanchi and Pyuthan districts reported the highest proportion of their population being absent (staying abroad).</p>
<p>
	<img alt="Top five Absent Population District, Revisiting Nepali Consumers, Cover Story" height="153" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_absent_population_district.jpg" width="595" /></p>
<p>
	<img alt="Top Ten Destination of Migrant Nepali Workers, Revisiting Nepali Consumers, Cover Story" height="764" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_remittance_migrant_workers.jpg" width="380" /></p>
<p>
	 </p>
<p>
	<strong>Media Consumption</strong></p>
<p>
	The media consumption patterns, profiles of audiences on different platforms and media types, and the effectiveness of advertising across platforms have been significantly changed over the last decade.&nbsp;<span style="font-size: 12px;">Consumers concentration has been shifted to the television from radio, according to Managing Director at JWT-Thompson Nepal Joydeb Chakravarty. “Ten years back the national media was radio but today more people watch television,” he says.&nbsp;</span></p>
<p>
	<span style="font-size: 12px;"><img alt="Media Consumption, Revisiting Nepali Consumers, Cover Story" height="262" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_media_consumption.jpg" width="521" /><br />
	</span></p>
<p>
	<strong>Computer and Internet</strong></p>
<p>
	Computers and Internet products are also growing day by day. The number of Internet users in Nepal has accelerated in the country. Access to the Internet has positive implications for society and the economy. A study carried out by Computer Association of Nepal (CAN) last year showed that the computer penetration rate in the country had crossed five per cent. The survey was carried out based on the record of import of computer monitors and branded laptops, according to CAN general secretary Narayan Neupane. The penetration rate of computer at present may have crossed eight, he says, adding that the trend of using computers is on the rise since schools, health institutions, clubs and other social groups in far flung areas of the country have started using computers for their day-to-day activities.&nbsp;</p>
<p>
	<img alt="Computer and Internet, Revisiting Nepali Consumers, Cover Story" height="171" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_telephone.jpg" width="531" /></p>
<p>
	<strong style="font-size: 12px;">Automobiles</strong></p>
<p>
	Nepal has been seeing the penetration of two- and four-wheelers increasing at a rapid pace, thanks to the expansion of road connectivity and increased income of citizens. Expansions of road network throughout the country and a steep rise in the number of migrant workers have played a catalytic role in the growth of automobile sales.&nbsp;</p>
<p>
	So, many automobile brands have been able to establish themselves and automobile has become one of the largest customs duty contributors in the country. Nepali consumers have been using four-wheeler ranging from the most expensive one to the cheapest Nano car. Similarly, Nepal-assembled brands such as Mustang and Sherpa has also been rolling on Nepali roads. &nbsp;</p>
<p>
	<img alt="Top three districts with various Vehicles facilities, Revisiting Nepali Consumers, Cover Story" height="280" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_vehicles.jpg" width="533" /></p>
<p>
	<strong>ICT and Mobile</strong></p>
<p>
	Not only telecom sector but also the market of entire Information and Communication Technology (ICT) has expanded over the last few years. As far as mobile market is concerned, Nepal has approximately Rs 15 billion transaction every year, according to chairman of Mobile Traders Association of Nepal Purushottam Basnet. Nepal has been very potential market for mobile phone sets and other ICT products.</p>
<p>
	<img alt="Top three districts with ICT and Mobile, Revisiting Nepali Consumers, Cover Story" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_ict_mobile.jpg" /></p>
<p>
	<strong>Home Appliances&nbsp;</strong></p>
<p>
	Sales of the home appliances have tremendously increased over the last year. The sales of refrigerators, washing machines, vacuum cleaners, LEDs and LCDs has boosted in the recent years. Besides, people living in urban areas are continuously upgrading their living standards, and home appliances are deemed as components that add value to their living condition. The market of home appliances has also increased in the rural areas too.&nbsp;</p>
<p>
	<img alt="Top three districts with  Refrigerator facilities, Revisiting Nepali Consumers, Cover Story" height="160" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_may2013_revisiting_nepali_consumers_home_appliances.jpg" width="532" /></p>
<p>
	<span style="font-size: 12px;">Consumer diversity is obviously very high in the country and creating more challenges for the marketers. There is diversity at multiple levels: ethnic and caste differences, religious diversities, rural-urban diversities, diversities in source of income and educational level along with others. Yet, there are many opportunities since the Nepali market is not fully explored so far. On top of all, Nepali consumers are very eager to try new products and services.&nbsp;</span></p>',
			'published' => true,
			'created' => '2013-05-22',
			'modified' => '2013-06-07',
			'keywords' => 'Revisiting Nepali Consumers: Facts, Trends & Business Impacts, Cover Story, New Business Age',
			'description' => 'Many believe that Nepal is still an under-explored market given the potential it has. The market is growing and chances of further expansion are still very high due to the increased awareness and affordability of consumers.',
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	(int) 5 => array(
		'Article' => array(
			'id' => '999',
			'article_category_id' => '40',
			'title' => 'Young Consumers Have Smart Perspective On How To Spend Money',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong>Mani Raj Dahal</strong></address>
<address>
	<strong>Country Manager</strong></address>
<address>
	<strong>The Nielsen Company Nepal Pvt Ltd</strong></address>
<p>
	<span style="font-size: 12px;"><br />
	</span></p>
<p>
	<span style="font-size: 12px;">It is very important to assess how the market is doing and what the current trends of consumption are to revisit the consumers. Nepal is still an unexplored market in many fields and, therefore, it offers possibilities of market expansion to companies. It is worthwhile to mention here that the spending and consumption habit of consumers are positive in Nepal, despite the huge political problems the country is going through.&nbsp;</span></p>
<p>
	<strong>Rising Consumerism&nbsp;</strong></p>
<p>
	There is a tremendous potential in the country for companies to expand their products and services.&nbsp;<span style="font-size: 12px;">The swelling consumerism has seen the introduction of a range of new products like ready-to-eat snack foods, breakfast cereals, textures vegetable protein foods and so on. Different brands of the same item and attractive packaging vie &nbsp;for the consumers’ attention.</span></p>
<p>
	<strong>Spending Capacity</strong></p>
<p>
	The increased spending capacity of consumers is really a good sign in the Nepali market. &nbsp;The inflow of remittance and tourism have contributed to increase the income of consumers. The purchasing power of consumers has a direct impact on the market expansion.&nbsp;</p>
<p>
	Every investor asks some questions before starting a business: how big is the market and what are the possibilities of growing? And the scenario in Nepal is not so bad. Though Nepali market is not that big, there’s enough room for new companies and brands.&nbsp;</p>
<p>
	<strong>Youth Focused Market</strong></p>
<p>
	At present, the consumption of Nepali young generation forms a thriving market. Young consumers are usually impressed with branded and quality goods and services then being purely price sensitive . Companies and service providers can take advantage of this to further set up their brand image.<span style="font-size: 12px;">The young generation enjoys a staggering amount of purchasing power in the country due to foreign employment and inflow of remittance. Young consumers not only have money, but also have smart perspectives on how to&nbsp;</span><span style="font-size: 12px;">spend money.&nbsp;</span></p>
<p>
	<strong>Consumerism and Socialisation</strong></p>
<p>
	It is really interesting to mention here that Nepali culture has changed over the years due to technology and consumerism.&nbsp;<span style="font-size: 12px;">Our socialization process has changed, compared to some years ago. Lifestyle and consumption habits are considered to be the main reason for the socialization and it is obvious that the process of socialization has changed throughout the last one or two decades. For instance, we can take café culture, business in Valentine Day or may be English New Year.&nbsp;</span></p>
<p>
	<strong>Nepali Products</strong></p>
<p>
	Entrepreneurship is something that will help the country to achieve sustainable development. The chances of entrepreneurship are very high in Nepal, all we need is creative minds and creative ideas. In Nepal, the chances of branding local products are very high. Nepali people are very much habituated to consume Nepali food and drinks trend and young entrepreneurs can establish Nepali brands of that sector. The typical Nepali style goods are also making their brands .</p>
<p>
	<strong>Price Hike Impact&nbsp;</strong></p>
<p>
	It is an interesting fact that in Nepal, despite the frequent price hike of Fast-moving Consumers Goods (FMCG), the market has not seen a drop in the demand of such goods. This indicates that consumers have got the capacity and are willing to pay more for the products of their choice of consumption.</p>',
			'published' => true,
			'created' => '2013-05-22',
			'modified' => '2013-05-22',
			'keywords' => 'Young Consumers Have Smart Perspective On How To Spend Money, Cover story, New Business Age, May 2013',
			'description' => 'Entrepreneurship is something that will help the country to achieve sustainable development.',
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	(int) 6 => array(
		'Article' => array(
			'id' => '998',
			'article_category_id' => '40',
			'title' => 'When You Build Your Own Brand You Are Able To Command A Premium Rate',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong><span style="font-size: 12px;">Joydeb Chakravarty</span></strong></address>
<address>
	<strong>Managing Director</strong></address>
<address>
	<strong>JWT-Thompson Nepal</strong></address>
<p></p>
<p>
	<strong style="font-size: 12px;">Excerpts:</strong></p>
<p>
	<strong style="font-size: 12px;">Some experts say that Nepal is still an untapped and unexplored market. Do you agree?</strong></p>
<p>
	Nepal was first country in the region to be exposed to international brands. Some 30 years back, India did not have the access and exposure to the brands that were here in Nepal. Nepali consumers have always been exposed to these kinds of international brands for last 30-40 years. So, when local brands try to enter this market they find it a challenge because consumers benchmark it with international brands that they have already used. It could be in any category, but the consumers give it a fair trial and if it does not meet their expectations then they have no hesitation in rejecting it. The Nepali consumers are very discerning indeed!</p>
<p>
	<strong>Can you please tell us some major differences in the consumers’ behavior in the past and present?</strong></p>
<p>
	Today the consumers have a different kind of exposure because of the reach and penetration of the international media. This has had very large impact to the consumers’ psyche. When you look at the way people dress, we see they are following the world’s leading trends. Nepali consumers’ tastes and trends have evolved over the last couple of decades. Look at the way they have embraced new technology, new gadgets and even smart phones. Look at two wheeler sector, earlier people went for something functional but not anymore. Now they want a higher-end bike to go with their perceived self-image. People have a much higher level of aspiration now, and want to show that through their material possession.&nbsp;</p>
<p>
	<strong>What are the practices of the companies regarding study of consumers’ buying behavior in Nepal?</strong></p>
<p>
	Client and organizations in Nepal are talking about research. Although, they might not always employ a professional research agency, they might want to do research in-house, through their own team, which is not the right way to do it, but it still goes some way. Earlier there a few companies who actually believed in market and consumer research but that’s changed. We now see that clients and companies are talking about research, which is a very positive sign.</p>
<p>
	<strong>How is the branding practice in Nepal? How important is branding from your perspective?</strong></p>
<p>
	Branding has caught on over the last two decades. Everything now seems to be branded. I am just not talking about the consumer goods, but commodities which at one time were sold loosely are now branded. Companies have now come to realize and appreciate that when you build your own brand you are able to command a premium rate.</p>
<p>
	<strong>What is the media consumption habit of Nepali consumers right now?</strong></p>
<p>
	If you see the ownership in the durables likes colour television (63% in 2012 Vs 13% in 2003), radio, refrigerator and mobile phones have drastically increased. Ten years back the national media was primarily radio based but today there are more people watching television than listening to the radio. Obviously radio has not been able to catch the imagination the listeners, while television has caught on despite having more than 350 FM radio channels in Nepal. The print too have taken its toll, readership has gone down over the last ten years even though literacy has gone up. The reason could be the high cover price of newspapers. The usage of the internet has gone up drastically from 2% in 2002 to more than 25% in 2012.&nbsp;</p>
<p>
	<strong>How do you envisage the importance of advertisement to catch the emotional side of consumers?</strong></p>
<p>
	If you are unable to connect with your customers on an emotional level, you will not be able to engage with them meaningfully. Consumers today have many interests and they are not waiting to see your advertisements! Unless you are able to make an emotional connection with your customers; make your advertisements distinctive, emotional, entertaining and engaging otherwise you cannot hope to catch their attention.</p>
<p>
	<strong>What are the contributing factors in the quality of advertisements? What are the reasons behind low quality of advertisement in Nepal?&nbsp;</strong></p>
<p>
	Over the last few years the quality of advertisements has not matched the expectation of the Nepali consumers. &nbsp;There are many reasons for that, no one wants to take a ‘risk’ and everyone wants to ‘play safe’. Companies feel that if they come up with a “creative” advertisement it might go over the head of their audience. There is very little the advertising agencies can do in that kind of a scenario. This is also compounded by the severe shortage of creative people in the advertising sector. Moreover, top quality advertising production – especially films cost huge amounts of money. The market here is very small compared to other countries&nbsp;<span style="font-size: 12px;">in the region.&nbsp;</span></p>',
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			'created' => '2013-05-22',
			'modified' => '2013-05-22',
			'keywords' => 'When You Build Your Own Brand You Are Able To Command A Premium Rate, cover story, New Business Age',
			'description' => 'Nepal was first country in the region to be exposed to international brands. Some 30 years back, India did not have the access and exposure to the brands that were here in Nepal. Nepali consumers have always been exposed to these kinds of international brands for last 30-40 years.',
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	(int) 7 => array(
		'Article' => array(
			'id' => '947',
			'article_category_id' => '40',
			'title' => 'New Year Hues: Products, Promises And People',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong>By Siromani Dhungana<br />
	<br />
	<br />
	<br />
	New Year Hues: Products, Promises and People</strong><br />
	<br />
	Outlets of the world&rsquo;s most famous brands have already started doing their business in Kathmandu providing consumers chances of more choices and selections. The powerful combination of sophistication in use of goods, changing lifestyle in the urban area and consumers&rsquo; access to information created by information and technology have brought about an unprecedented shift in the consumers&rsquo; brand use habit. On the other hand, it has created both opportunities and challenges for companies looking for potential buyers. Increased competition among various players has compelled them to lure customers by offering different packages. New Business Age tries to catch-up some existing market phenomenon in Nepal and explores the connection between products and people in the market.<br />
	<br />
	The fastest-growing middle and upper middle-class consumers have created many opportunities for companies in the Nepali market. Earning enough to afford quality brands and quality consumer experiences, the younger generation has become brand-focused and up to date with the latest arrivals. From gadgets, clothing and watches to other personal belongings, the new generation has become brand conscious and choosy.<br />
	&nbsp;<br />
	On the other hand, the increasing competition among different brands has forced companies to lure potential consumers by offering attractive packages. Various companies have been trying to lure consumers using various techniques including bumper offers, appointment of brand ambassadors, advertising campaigns in the media and other packages to ensure the success of their brands. Private business houses have been aggressively putting their effort to get a hold in the market, opines young entrepreneur Meele Shrestha of Maxlee Traders Pvt Ltd. New Year 2070 may not witness a drastic change in the market but it can create a different type of vibration, she adds.<br />
	<br />
	<br />
	<img alt="products" src="/userfiles/images/2070-1.jpg" style="margin: 10px; width: 400px; height: 280px;" /><br />
	<br />
	<strong>Marketing of Products</strong><br />
	<br />
	Marketers always think that if they want a product to catch on, they have to think up a catchy slogan or come up with a slick advertisement to create a buzz. It is really impossible to exactly assess what propels consumers to buy particular products.<br />
	<br />
	Advertising campaigns are not enough. Companies should also think about linking products to the environment and let the environment do the work besides the advertisement and other ways of publicity of products.Consumers&rsquo; behaviour is strongly influenced by subtle environmental cues. In Nepal, most consumers want to follow the wealthy population in terms of products consumption and buying. Availability, price structure and quality of products largely determine whether the product can hold the market.<br />
	<br />
	<br />
	<strong>Consumers&rsquo; Psychology</strong><br />
	<br />
	Even big companies around the world cannot always predict consumers&rsquo; psychology correctly. Sometimes, a simple product can create a trend in the market but other times even meticulously designed and decorated product may fail to attract consumers.<br />
	<br />
	Consumers&rsquo; decisions on products are driven largly by implicit associations with the imagery connected to a brand. And, sometimes their decision may be associated with the subconscious emotional appeal of products. Why and how people buy some products and not others? Consumers&rsquo; psychology is a specialty area that studies how our thoughts, beliefs, feelings and perceptions influence how we buy and how we relate to goods and services.<br />
	<br />
	<img alt="nepali market" src="/userfiles/images/2070-2.jpg" style="width: 400px; height: 266px; margin: 10px;" /><br />
	<br />
	<strong>Diversifying Nepali Market</strong><br />
	<br />
	Markets of various products and brands have a tremendous potential to expand in Nepal. The modern marketing approach is a post 1990 phenomenon, a large section of people is still out of the the modern market system leaving room for new and innovative companies to expand their presence. And that is happening too.<br />
	<br />
	Kathmandu has many outlets and high-end streets to showcase state-of-the-art brands of various products. The trend of opening modern outlets outside the Kathmandu valley is on the rise. Pokhara, Biratnagar, Dharan, Itahari, Birgunj among others are slowly waking up to the modern marketing approach.<br />
	<br />
	The population of Nepal as of June 22, 2011 stands at 26.49 million showing a population growth rate of 1.35 per annum, according to Central Bureau of Statistics. According to the Nepal Demographic and Health Survey, a total of 40 per cent of people are below 15 years of age and another 30 percent are between 15-49 years of age. Clearly, the country has a huge potential for products and brands. because of the large youth population.<br />
	<br />
	All companies need to win the hearts and minds of the consumers to get a foothold in the market. In this issue, New Business Age presents a consumer-focused story looking at various products and brands and they promises to the consumers for the New Year 2070 BS. It also looks at the preferences and opinions of some consumers from various segments of society:<br />
	<br />
	<br />
	<br />
	<strong>Automobile</strong><br />
	<br />
	Nepal has seen the penetration of two- and four-wheelers increase at a rapid pace, thanks to the expansion of road connectivity and increased income of citizens. Expansions of roads throughout the country and a steep rise in the number of migrant workers have played a catalytic role in the growth of automobile sales. So, many automobile brands have been able to establish themselves and automobile has become one of the largest customs duty contributors in the country. Nepali consumers have been using four-wheelers ranging from the most expensive one to the cheapest Nano car. Similarly, Nepal-assembled brands such as Mustang and Sherpa have also been rolling on the Nepali roads.<br />
	<br />
	In fact, the automobile market is all set to open a new avenue in the country. New Business Age has talked with highly popular automobile brands, Volkswagen and Honda, regarding their business prospects in Nepal (keeping the Nepali New Year 2070 BS in mind.)<br />
	<br />
	<br />
	<img alt="watch" src="/userfiles/images/watch.jpg" style="width: 400px; height: 248px; margin: 10px;" /><br />
	<br />
	<strong>Watches and Clocks</strong><br />
	<br />
	The Global Industry Analysts (GIA), Inc predicts that the global market for Watches and Clocks is poised to reach US$46.6 billion and US$5.4 billion, respectively, by the year 2017. In a report &lsquo;Watches and Clocks &ndash; a Global Strategic Business Report&rsquo; released last year, GIA has concluded that the recuperation in demand for luxury watches post recession, robust demand from developing markets especially the Asia-Pacific and rising popularity of fashionable, vintage and innovative models are forecast to drive market growth.<br />
	<br />
	The Nepali market for watches and clocks has been ballooning, say traders. Around 50,000 pieces of branded watches are sold every year in Nepal, according to them. Globally famous watch brands have already started their business in Nepal and are doing well. On the occasion of New Year, New Business Age has approached some top watch brands in the Nepali market. Most famous brands available in Nepal such as Rolex, Rado, Tag Heuer, Omega, Titanic and Esprit will focuse on advertising to attract consumers in the New Year, according to their authorised distributer in Nepal.<br />
	<br />
	<img alt="mobile" src="/userfiles/images/2070-6.jpg" style="width: 400px; height: 269px; margin: 10px;" /><br />
	<strong>Mobile</strong><br />
	<br />
	According to the latest data made available by Nepal Telecommunications Authority (NTA), Nepal&rsquo;s telephone penetration rate reached 70 per cent in mid- December 2012. The mobile handset market will go hand in hand with the mobile penetration rate and the trade in hand-held terminals that<br />
	&nbsp;<br />
	have increased significantly in the last couple of years. The annual transaction of mobile sets in the Nepali market stands at around Rs 13 billion, says president of Mobile Traders Association of Nepal, Purushottam Basnet.<br />
	<br />
	The cheaper series of android phones has created an &lsquo;android revolution&rsquo; in the country, he opines, adding that a mobile set was considered as a sophisticated personal belonging until not long ago, but it has now become an essential commodity.It is obvious the customers who the companies should always take care of, authorised sellers of mobile sets say. According to them, no special package has been developed so far focusing on Nepali New Year but consumers will definitely benefit due to increased competition and presence of many popular brands in the mobile market.<br />
	<br />
	<br />
	<img alt="wear/fashion" src="/userfiles/images/2070-8.jpg" style="margin: 10px;" /><br />
	<strong>Wear/Fashion</strong><br />
	<br />
	The young generation is &lsquo;fashionable&rsquo; and choosy. This generation also tends to emphasize brand value in their spending.It is very smart to follow the latest trends and embrace innovative fashion design. Today, those who can&rsquo;t afford a particular brand, would wait until they can.<br />
	<br />
	Fashion in Nepal is a fast growing industry with increasing events such as fashion weeks or beauty peasants. Now a days, many world famous brands are available in the Nepali market. Lee, Levis, Springwood, Northface, Jeanswest, Pashmina and others brands have succeeded to win the hearts and minds of Nepali consumers in the dress and fashion regime. However, some local designers, too, have made their presence felt.<br />
	<br />
	Dress and fashion-lovers in the town will have reason to cheer in the Nepali New Year because most of the dress brands and outlets are going to offer discount schemes or other packages. But it takes time to know the nature of the offers because brands do not want to reveal their special package in advance, because of competition.<br />
	<br />
	<br />
	&nbsp;<img alt="cosmetic" src="/userfiles/images/2070-11.jpg" style="width: 400px; height: 314px; margin: 10px;" /><br />
	<strong>Cosmetics</strong><br />
	<br />
	The country&rsquo;s cosmetics market has witnessed a rapid growth over the last couple of years. With each passing year, the availability of cosmetic products has increased significantly and the consumption rate has soared. There is no dearth of the world&rsquo;s leading cosmetic brands in the local market. Whatever you want, the market has it. Traders estimate that the country&rsquo;s cosmetic market is worth more than Rs 15 billion annually, and it is growing at the rate of 25-30 percent.<br />
	<br />
	A growing middle class and rising awareness about personal image and hygiene, which has resulted in greater spending on beauty and personal care products, has played a very constructive role on the rise of demand for cosmetic items. From globally recognized brands like Lakme, L&rsquo;Oreal, Garnier, VLCC and Emami to others like Mac&rsquo;s Lavera, Nova, Chase, Astaberry, Lotus and Ayur, the domestic market at current features around 80 brands of cosmetic products. The market is showing continuous growth, says Adhiti Adhikari of Laavanya brand.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>Airlines</strong><br />
	<br />
	Nepal saw a significant growth in air transport after the aviation policy was liberalised in 1992. The annual passenger movement reached around three million in 2012. According to Civil Aviation Authority of Nepal (CAAN), 31 international airlines are operating in Nepal. Similarly, 15 domestic companies, including nine fixed-wing and six helicopter companies, are also in operation.<br />
	<br />
	The prospects look bright with the private sector playing a leading role and investing billions in the industry. Buddha Air and Yeti Airlines have successfully proved their salt in the domestic market while internationally acclaimed companies such as Oman Air, Qatar Air, Jet Airways and Thai Air -- to name a few -- have also served the Nepali travellers well. Domestic airlines are all set to introduce some special packages to customers, international companies will also bring special offers targeting the Nepali New Year. For the time being, keep on guessing what offers domestic and international airlines may bring to attract travelers.<br />
	<br />
	<br />
	<img alt="liquor" height="312" src="/userfiles/images/2070-15.jpg" style="margin: 10px;" width="176" /><br />
	<br />
	<br />
	<strong>Liquor</strong><br />
	<br />
	There is a huge market for alcohol . The demand has been increasing each year due to the rise in household income, which comes from remittance inflows. There have been instances in some districts where most of the remitted money was spent on imported, high premium liquor.<br />
	<br />
	Both domestic and international brands have been doing their business in the Nepali market. Liquor is also a major source of revenue in the country. The overall business of restaurant and bar has decreased due to Mapase (a campaign against drunk-drive launched by Division of Metropolitan Traffic Police); but liquor business is still one of the evergreen sectors in the country.<br />
	<br />
	People had mostly negative perception about liquor in the Nepali society until some years ago. This perception has changed now and alcohol has become a part of daily life now. Whether it is a gathering or a grand party, it is not considered complete without liquor.<br />
	<br />
	Some famous liquor brands such as Antiquity, Ballentine, Royal Stag and Signature have already won the trust of middle class consumers. World-class brands such as Red Label, Black Label and Chivas Regal have also been doing good business in the Nepali market. It is for sure that many of us will be celebrating the occasion sipping of liquor according of our choice.<br />
	<br />
	<br />
	<strong><img alt="paints" height="231" src="/userfiles/images/2070-19.jpg" style="margin: 10px;" width="250" /><br />
	Paints</strong><br />
	<br />
	The paint market has thrived over the years, creating much space for paint companies to expand their market in the country. Rapid urbanisation, construction boom and growing awareness among customers have triggered the demand of paints, giving a leg up to the domestic paint industry, mostly joint ventures and subsidiaries of Indian multinational companies.<br />
	<br />
	The annual domestic demand for paints (including decorative and industrial categories) currently stands at around 40,000 metric tonnes, according to industry sources. The data released by Nepal Rastra Bank, there was a turnover of around Rs 4.10 billion in fiscal year 2011-12.<br />
	<br />
	Despite the slowed demand in the recent days due to recession in the construction sector, m a n u f a c t u r e r s observe that the market is growing. Demand of paint will never go down because a fresh coat of paint is always required even in old houses and people want to change the &nbsp;<br />
	colour to give a different look to their apartments and rooms.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>Housing</strong><br />
	<br />
	Nepal&rsquo;s real estate sector has been in an ailing state for three years now. The real estate and housing industry witnessed a speedy growth (which many say was an unnatural growth) until the Nepal Rastra Bank (NRB), regulator of the country&rsquo;s financial market, suddenly restricted banks&rsquo; lending to the sector in September 2010.<br />
	<br />
	The government planned to purchase houses and apartments for senior civil servants last year. The decision, could give a new lease of life to the cash strapped housing sector, is moving at a snail&rsquo;s pace. However, some positive indication of growth has been seen in the realty sector from the beginning of this year. According to real estate entrepreneurs and housing developers, this business has grown by 33 per cent in the first half of the current fiscal year, compared to the same period in the previous year.<br />
	<br />
	The New Year is expected to bring new hopes and new enthusiasm to the realty sector, opines secretary at Nepal Land ad Housing Developers Association (NLHDA), Bhesh Raj Lohani.<br />
	<br />
	<br />
	<strong>Computers</strong><br />
	<br />
	A study carried out by the Computer Association of Nepal (CAN) last year showed that the computer penetration rate in the country had crossed five per cent. The survey was carried out based on the record of import of computer monitors and branded laptops, according to CAN general secretary Narayan Neupane.The penetration rate at present may have crossed eight percent, he says, adding that the trend of using computers is on the rise since schools, health institutions, clubs and other social groups in the far-flung areas of the country have started using computers for their day-to-day activities.<br />
	<br />
	It is likely that the transaction of overall ICT products will double in the next few years. Internet penetration rate increased to around 23 per cent till mid- December, and the rise of Internet users will have a direct impact on the trade of computers, he claims. High competition among world class brands including HP, Dell, Asus, Compaq, MAC, Sony, Lenovo and Acer have not only contributed to lower the price, due to hard competition, but also have provided quality products to Nepali customers.<br />
	<br />
	&nbsp;</p>
<p>
	&nbsp;</p>
<p>
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;New Year is Definitely a High Season for Passenger Cars&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="sarik" src="/userfiles/images/SARIK.jpg" style="width: 150px; height: 144px; margin: 10px;" /><br />
	SARIK BOGATI<br />
	<br />
	Head of Marketing, Pooja International (authorised distributer of Volkswagen)</strong><br />
	<br />
	<br />
	<strong>Can you please tell us briefly the overall business scenario of your product in the first quarter of 2013?</strong><br />
	<br />
	The year 2013 seems to be very lucky for Pooja International and the automotive division of Vishal group. Talking about the Volkswagen Brand, we have very good starting with arrivals of fresh 2013 models of Polo and Vento from India. There are many updates in the features like bluetooth in steering control, auto Aircon in Polo, increased leg room, introduction of new colours in cars, new alloys and black headlamps. We have started receiving the New Tiguan, Golf and New Touareg, which are also catching up the market. As a corporate strategy, the automotive division of Vishal Group has expanded its wing in a new segment with acquirement of dealership of &lsquo;Kobelco&rsquo; construction equipment in February 2013.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter, i.e., April- June, 2013 as the Nepali New Year sets in?</strong><br />
	<br />
	New Year and spring season is definitely high seasons for passenger cars. We have so many bankers in queue waiting to upgrade to Volkswagen in this season. Moreover, we will have more cars coming in this quarter from both Germany and India. Now, we can supply the cars to the customers who have been booking and waiting for months. We are very hopeful of the next quarter.<br />
	<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are the main features of your products/brands?</strong><br />
	<br />
	Kobelco construction equipment definitely is an exciting brand and has amazing performance machines which we will offer this year. Moreover, we are expecting some new models and facelifts of Volkswagen coming from India this year.<br />
	<br />
	<br />
	<strong>Can you please provide the price ranges?</strong><br />
	<br />
	We really can&rsquo;t say the price now. But the price would be similar range at what we are offering now.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular especially in the next month: April (Baisakh)?</strong><br />
	<br />
	We would be more focused on branding.</p>
<p>
	&nbsp;</p>
<p>
	&nbsp;</p>
<p>
	<br />
	<br />
	<strong>&lsquo;Toyota Starts to Book New Product Etios Targeting Nepali New Year&rsquo;<br />
	<br />
	<br />
	<img alt="" src="/userfiles/images/SAHARA.jpg" style="width: 150px; height: 151px; margin: 10px;" /><br />
	<br />
	SAHARA KC<br />
	Executive Divisional Manager<br />
	United Traders Syndicate (UTS)<br />
	(authorised dealer of Toyota in Nepal)</strong><br />
	<br />
	<br />
	<strong>Could you please tell briefly the overall business scenario of the produt/brand?</strong><br />
	<br />
	After a hugely successful business year, Toyota now is facing a mild slowdown in terms of sales, which can be ascribed to the recent economic crunch and inability of Toyota to meet the existing demand. The first quarter of this year is almost gone by in the anticipation of launching our new product Etios.<br />
	<br />
	<br />
	<strong>What are the expected returns within the next quarter?</strong><br />
	<br />
	The next quarter is expected to bring a boom in our business with the launch of our highly awaited product Etios. As the Nepali New Year approaches, we will be accepting bookings for the car. Looking at the large number of inquiries about the product, we are expecting a lot of bookings prior to the launch.<br />
	<br />
	<br />
	<img alt="sahara" src="/userfiles/images/sahara1.jpg" style="margin: 10px;" /><br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are the main features of your brands?</strong><br />
	<br />
	As of now, we do not have any new product offering for New Year but we are expecting sales of the product that we have in our offering. Avanza, Hilux, Fortuner, Corolla, Yaris are a few products that we expect to sell more.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular?</strong><br />
	<br />
	Apart from our regular promotional campaigns and promotions for Etios that we will begin from the next month, the launching of Etios will be something the city has never witnessed before. We are focused on making the event an eye catcher for not only our customers and prospects but for anyone who gets a mere glimpse of the event.<br />
	<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;December to January is Considered a Dull Period&rsquo;<br />
	<br />
	<br />
	<img alt="rahul" src="/userfiles/images/RAHUL.jpg" style="width: 150px; height: 143px; margin: 10px;" /><br />
	<br />
	RAHUL DHANUKA<br />
	Brand Manager<br />
	Esprit Watch</strong><br />
	<br />
	<br />
	&nbsp;<br />
	<strong>How do you see the possibility of the business in the next quarter?</strong><br />
	<br />
	With the Nepali New Year approaching, people will certainly start feeling the heat of summer. The watch business is likely to rise because of the change of season. People tend to spend more on watches in summer than in winter. Moreover, the New Year will bring festive mood back. So, people will spend comparatively more than in any other time of the year. We also have the latest collections in store, so watch lovers can try out new collections that will certainly match the latest trend and fashion.<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are main features of your products/ brands?</strong><br />
	<br />
	We have several brands available at all our outlets. Most recently launched brands are Esprit and Pierre Cardin. The brands trendy and casual models. Few most sought other products and brands are: Fossil and Kenith Cole.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of these brands?</strong><br />
	<br />
	The price ranges from Rs 10000 to Rs15000.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products popular in the next month?</strong><br />
	<br />
	We have three outlets for our products and all of them are located in prime areas like Durbar Marg, City Center and Blue Bird Mall. We are using different branding and promotional strategies. We mainly focus on the print media like different magazines, newspaper, hoarding boards, etc. We have also started targeting our customers through social media like Facebook and Twitter. Fan pages on facebook have helped us a great deal to attract young mass towards our products.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Today is What Technology Stays on, Tomorrow is Where it Moves Ahead&rsquo;</strong><br />
	&nbsp;</p>
<p>
	<img alt="sachin" src="/userfiles/images/SACHIN.jpg" style="width: 150px; height: 148px; margin: 10px;" /><br />
	<br />
	<strong>SACHIN UDAS<br />
	Marketing Manager, Teletalk (authorised distributer of Colors Mobile)</strong><br />
	<br />
	<br />
	<br />
	Colors is one of the most popular mobile set brands in the country. It has full ranges of mobile phones from basic level to touch-based lifestyle phones, along with CDMA and hi-end smartphones. Colors is a reliable brand with one year of warranty.Colors has the largest network with 18 service centres from East to West. Colors operates after-service follow-ups to assure customers are satisfied with the products.<br />
	<br />
	Colors brand believes in value transferring. We have four major series of Phone: Fighter, Lifestyle and Touch, CDMA and X-factor series. Fighter series consists bar phones with basic features, which can play MP3/ MP4. Fighter series is very popular all over the country. Lifestyle and Touch Series offers multi media facilities like touch screen. Colors&rsquo;s has introduced smartphones under X-factor series. In less than a year, the company has taken good market share of smartphones.We will have entry level android phones, which we want in every teen&rsquo;s hand so that they can explore different apps that are useful in learning languages and also for other purposes. We believe that the android is the key for Nepali teens to experience and explore possibilities of technology.<br />
	<br />
	Colors&rsquo;s X-factor tablets will be soon arriving to the market. It will come in 7 inch and 8 inch screen sizes with 3G SIM compatibility.&nbsp; Colors brand believes that today is what technology stays on, tomorrow is where it moves ahead.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;New Year is Expected to Bring New rays in Summer Sale&rsquo;<br />
	<br />
	<img alt="achal" src="/userfiles/images/ACHAL.jpg" style="width: 150px; height: 164px; margin: 10px;" /><br />
	ACHAL AGARWAL<br />
	Director<br />
	JeansWest, Nepal</strong><br />
	<br />
	<br />
	<br />
	<strong>Can you tell us briefly the overall business scenario of your products in the first quarter of 2013?</strong><br />
	<br />
	The overall business scenario was very exciting during the first quarter. It has been two years since we introduced our brand in Nepal and people have responded well to the product.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter as the Nepali New Year sets in?</strong><br />
	<br />
	We expect a good sale during April-June since it is summer and people come to buy summer goods.<br />
	<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are their main features?</strong><br />
	<br />
	We have lots of products including T-shirts, half shirts, quarter pants, pants and summer jeans (for men and women) in the New Year.<br />
	<br />
	The main features of our brand are:<br />
	<br />
	a. Company controlled prices: This has become one of the major factors behind our brand to be so successful within such a short span of time. Our products are almost 30 per cent less priced than the similar kind of goods in the market.<br />
	b. Quality: JeansWest is known for its quality in Australia and worldwide markets.<br />
	c. Brand: JeansWest is a very big brand of Australia and so people know about this brand making it very easy for us to get established in the market.<br />
	d. Variety: At JeansWest, we have a very wide range of products.<br />
	e. Size and Fit: JeansWest products have been received well in the Nepali market because of their sizes and fittings for Nepali people.<br />
	<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of the same?</strong><br />
	<br />
	Price ranges from Rs 990 to Rs 4000.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular in the New Year 2070 BS?</strong><br />
	<br />
	Paper media and hoarding boards will be our main marketing strategies in the New Year.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Customer Satisfaction is a Must to Make Products Popular and Desirable&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="dilip" src="/userfiles/images/DILIP.jpg" style="width: 150px; height: 168px; margin: 10px;" /><br />
	DILIP KC<br />
	Sports Plaza Pvt Ltd<br />
	(Authorised distributer of Reebok, Rockport and Lee brands)</strong><br />
	<br />
	<br />
	<br />
	&nbsp;<br />
	<strong>Could you please tell us briefly the overall business scenario of products in the first quarter of 2013?</strong><br />
	<br />
	Sports Plaza Pvt Ltd covers Reebok, Rockport and Lee brands, which are one of the best apparel and footwear brands in the world. January 2013 sets in with winter at its peak and as the brand covers an entire range of winter apparels, footwear and accessories, we do not need to worry much about sales and acceptance of our products by our customers. These are world class products with the best designers putting in latest trends in fashion and comfort. They also involve new technologies in footwear and even in fabrics, not available in general.<br />
	<br />
	<br />
	<strong>How do you see the possibility of the business in the next quarter as the Nepali New Year sets in?</strong><br />
	<br />
	We are very optimistic about the business in the next quarter, when we will put our summer arrivals on display, welcoming spring summer with latest and the best in designs and the quality fabrics best suited for our customers. The lightweight footwear and air flow technologies are ultimate in comfort and style. We are sure of high sales volumes in spite of tough competition from other brands.<br />
	<br />
	<br />
	<strong>What are the main features of your products?</strong><br />
	<br />
	As already mentioned, Reebok is a premium sports brand always putting in highest standards of quality and workmanship, both on their footwear and sports apparels. The main features are light weight and best quality fabrics available in the industry with the latest technologies that goes into making them. To mention a few, the fabrics are play dry, which keep our body cool even in peak summer, zig fabrics which are proven to give back the energy dissipated from the body during workouts and exercising and the easy tone range &ndash; helping to tone the body muscles.<br />
	<br />
	Rockport is a trendy leather footwear range for men offering great style and comfort. Also the high technologies that go into Leather processing, The sole, and the workmanship required to make them. Lee is a casual fashion brand with best Denims and cottons available in the market. The designs, quality and price range has been well accepted in the market.<br />
	<br />
	<br />
	<br />
	<strong>Can you please provide the price ranges?</strong><br />
	<br />
	As there are many varieties of products, it would not be possible to cover the prices on this short space. However, if you want prices for some specific product range, we shall be glad to provide the same.<br />
	<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular?</strong><br />
	<br />
	We strongly believe that our customers&rsquo; satisfaction is the most desired strategy that would make our products popular and desirable. However, we can never undervalue the great cooperation and good wishes of our media friends from all publishing houses and advertising agencies, who have worked hard making great designs and offering us the best coverage available.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;We Want to Strengthen Laavanya Brand in the Coming Year&rsquo;<br />
	<br />
	<br />
	<br />
	<img alt="aditi" src="/userfiles/images/ADITI.jpg" style="width: 150px; height: 143px; margin: 10px;" /><br />
	ADITI BHATTARAI<br />
	Business Development Manager Laavanya Luxury Ayurveda</strong><br />
	<br />
	<br />
	<strong>Can you tell us briefly the overall business scenario of your brand in the first quarter of 2013?</strong><br />
	<br />
	This quarter has been significant for the company as we celebrated our first anniversary in February along with the commercial launch of our sales in the United States. This event has reinforced the strength of Laavanya as both national and international brand. We want to build on this perception and strengthen the brand further for the year.<br />
	<br />
	<br />
	<strong>What possibilities do you see for the business in next quarter, i.e., April- June, 2013 as the Nepali New Year sets in?</strong><br />
	<br />
	April to June is a special season for all our products because we have special events like New Year and wedding season of Baisakh and Asadh. Our products make great gifts for occasions like these. Our cleansing products like the Royal Saffron Ubtan (known as Bukuwa in Nepali) have special significance on wedding rituals and can be used by the brides (and their families) for beautifying as well as religious purposes. Last year, this period brought us the best sales and business prospects in the entire year.<br />
	<br />
	<br />
	<strong>What are your best products and brands to offer this New Year? What are their main features?</strong><br />
	<br />
	Taking the season into consideration, we will be promoting our cleanser, face mask and moisturizers this quarter. The cleanser (Royal Saffron Ubtan) and Face Mask (Mukha Kantibarkdhak Powder) are designed for all skin types and are beneficial in windy season, especially in Kathmandu where the effects of dirt from the street impact the skin directly. These products gently remove dirt particles and leftover make up, can be used daily.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges of those products?</strong><br />
	<br />
	Royal Saffron Ubtan-Rs 1250<br />
	Mukha Kantibardhak Powder-Rs 1250<br />
	Radiance Cream-Rs 1650<br />
	Deep Nourishing Cream-Rs 1950<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products/brands more popular especially in the next month?</strong><br />
	<br />
	We mostly focused on personal selling and word-of-mouth publicity this past year. In this quarter, we will be focusing on advertising through the print media and social media. We have used social media effectively in conveying the benefits of Ayurveda and our products and how and when to use them, we want to give continuity to that. We will also offer a special discount offer for New Year.<br />
	<br />
	&nbsp;</p>
<p>
	<br />
	<strong>&lsquo;Overall Business scenario is Good in the First Half of the Current FY&rsquo;</strong></p>
<p>
	&nbsp;</p>
<p>
	<img alt="bhesh raj lohani" src="/userfiles/images/bhesraj.jpg" style="width: 150px; height: 167px; margin: 10px;" /><br />
	<strong>BHESH RAJ LOHANI<br />
	Managing Director<br />
	Green Hill City Pvt Ltd</strong><br />
	<br />
	<br />
	<br />
	<strong>How is overall business of housing sector?</strong><br />
	<br />
	Green Hill City is the largest housing industry in Nepal. It will be developing around 800 units in 320 ropanies of land. As regarding the overall business scenario the product sellings are quite good in the first half of the current fiscal year. Out of 490 units constructed by the company, 130 units have been sold and ownership of 96 units had already been transferred.<br />
	<br />
	<br />
	<strong>What are the main features of Green Hill City&rsquo;s products?</strong><br />
	<br />
	We have two different products: acquiring land and constructing houses by consumers themselves and purchasing completed houses. Green Hill City is committed to providing quality services and best housing products to its customers. We have targeted all types of consumers ranging from the middle class to the upper class.<br />
	<br />
	<br />
	<strong>Can you please provide price ranges?</strong><br />
	<br />
	The price of housing units and colonies constructed by Green Hill City ranges from Rs 6.7 million to 30 million.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make your products more popular?</strong><br />
	<br />
	Till date we have been promoting our publicity strategies through newspaper advertisements, TV promos and hoarding board. The next campaign consist of a number of sales executive going the various corporate house providing the information about the products through direct marketing by the help of brochure and flyers.<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;Nerolac Produces Many Ranges of Products&rsquo;</strong></p>
<p>
	&nbsp;</p>
<p>
	<br />
	<img alt="rajendra" src="/userfiles/images/rajendra.jpg" style="width: 150px; height: 232px; margin: 10px;" /><br />
	<strong>RAJENDRA DESAI<br />
	Country Head<br />
	Nerolac Paints</strong><br />
	<br />
	<br />
	Considering the market&rsquo;s feedback, the paint market is opening and the season is starting after the winter. Cold weather is almost gone and we see a bright sun every day, which will help to increase the sales of paints and allied products. The construction activities are in full swing, these means an increased demands of paints. Paint sales in the first quarter will be much higher than in the last quarter, and it is expected that the trend will continue in the coming months. We will have 3 per cent more than last year. We have started producing various ranges of Nerolac products, along with existing range of Nepal Shalimar brands. We are keen to market super premium products both for exterior and interior use.<br />
	<br />
	<br />
	<br />
	<br />
	<strong>&lsquo;ICT Market is Always Looking to Give Better and more Suitable technology&rsquo;<br />
	<br />
	<br />
	<img alt="" src="/userfiles/images/nabin.jpg" style="width: 150px; height: 160px; margin: 10px;" /><br />
	NABIN JOSHI<br />
	Assistant General Manager<br />
	Astral Computers Nepal Pvt Ltd</strong><br />
	<br />
	<br />
	<strong>Can you please tell briefly the overall business scenario of the ICT products in the first quarter of 2013?</strong><br />
	<br />
	The first three months seem good in terms of business prospects. Because the CAN InfoTech 2013 was held in the same quarter, the promotion of IT business was better compared to previous quarters. Due to CAN InfoTech, we were able to reach the end user as well as corporate customers. Therefore overall business scenario of ICT products looks bright.<br />
	<br />
	<br />
	<strong>How do you see the possibility of the business in the next quarter?</strong><br />
	<br />
	Along with consumers&rsquo; positive perception, ICT sector needs favorable and appropriate policies to grow. Despite of all above causes, the purchasing trend from organisations has increased. So, we are expecting the same situation, even with better possibilities in the next quarter.<br />
	<br />
	<br />
	<strong>What are your publicity strategies to make ICT products more popular?</strong><br />
	<br />
	Nepal&rsquo;s IT market is price driven. However, ICT products do not adapt to a single strategy for better publicity.<br />
	Apart from price, we also educate customers and suggest them the right product to enhance the productivity. Educating customers means building long term relationships, which enables to win their trust. In order to get more publicity about our products, we are trying to reach more and more customers, listening to their requirements and suggesting them the best option.<br />
	<br />
	<br />
	&nbsp;</p>',
			'published' => true,
			'created' => '2013-04-17',
			'modified' => '2013-07-28',
			'keywords' => 'new business age cover story news & articles, cover story news & articles from new business age nepal, cover story headlines from nepal,  current and latest cover story news from nepal, economic news from nepal, nepali cover story economic news and events,  ongoing  cover story news of nepal',
			'description' => 'Outlets of the world’s most famous brands have already started doing their business in Kathmandu providing consumers chances of more choices and selections. The powerful combination of sophistication in use of goods, changing lifestyle in the urban area and consumers’ access to information created by information and technology have brought about an unprecedented shift in the consumers’ brand use habit.',
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		'Article' => array(
			'id' => '896',
			'article_category_id' => '40',
			'title' => '‘We Need To Develop Our E-commerce First’',
			'sub_title' => '',
			'summary' => null,
			'content' => '<address>
	<strong><img align="right" alt="Sanjay Golchha, Golchha Organization" height="313" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_sanjay.jpg" style="margin:0 0 0 10px;" width="274" /><span style="color:#3ab0c4;"><span style="font-size: 22px;">'We need to develop e-commerce first'</span></span></strong></address>
<address>
	<strong><br />
	</strong></address>
<address>
	<strong>Sanjay Golchha</strong></address>
<address>
	<strong>Director</strong></address>
<address>
	<strong>Golchha Organization</strong></address>
<p>
	<strong style="text-align: justify;">What is an example of media convergence in Nepal due to the advent of new communication technologies?</strong></p>
<p style="text-align: justify;">
	Digital media is the most useful form of media for the advertisers. Online marketing has not been fully explored in Nepal. Although social media sites like Facebook have high usage in Nepal, advertisements on facebook are not very effective. Media convergence has only recently started making some impact. People do not understand the power of the digital media. Only international contents can be found in online ads, not the local content.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What has been the most useful communication technology convergence in the Nepali media?</strong></p>
<p style="text-align: justify;">
	To make use of communication technology in Nepal, e-commerce should develop first. It is not developing due to social and technical inefficiencies in Nepal. Online digital ads will be prominent on the Internet or on the websites only after we have a developed e-commerce business.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What has been the impact of media convergence on Nepal’s media industry?</strong></p>
<p style="text-align: justify;">
	The impact of media convergence will come slowly. This requires economic development and political stability in the country. This can provide a platform for the ecommerce businesses to develop more content. People are not using the online media to buy things online. Due to the poor financial situation of the country, people are not in a hurry to buy anything. They want to use their time to choose the products they want to buy. Another thing is, even if the people were interested in buying products online, the online payment system has not yet come into practice. Firstly, they cannot pay and secondly they cannot trust buying products online. Hence, there are many pending issues with regard to media convergence. First, the Nepali commerce and media industry should develop; the ads will follow later.&nbsp;</p>
<p style="text-align: justify;">
	<strong>How long shall it take to make a full impact?</strong></p>
<p style="text-align: justify;">
	The impact of media convergence can be seen soon. But, for this the Internet bandwidths should be cheaper and the Internet should be more accessible to the people. Online payment systems should also be developed and promoted. Due to the conservative financial system, online payment is difficult. Domestic payment systems should be prioritized and the international payment systems will automatically develop. The world is globalized today and lack of an online payment system is a major disadvantage to us. Businessmen should invest in e-commerce development. More pioneers are required. E-commerce websites like Thamel.com and Muncha.com are well established businesses. Airlines have also advanced in this sector. Buddha Air, Yeti Air and others as well have already started providing online reservation service to their customers.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What are the changes required in the media industry to adapt to the changes of media convergence?</strong></p>
<p style="text-align: justify;">
	They can also be explored for business development but this has not been done at all.&nbsp;</p>
<p style="text-align: justify;">
	If providing Internet on the phone brought a lot of profit to the mobile phone companies, then development of online payment system will be even more profitable. Nepal is a tourist destination. The tourism industry flourishes throughout the country. But, it is difficult for the tourists to learn more about Nepal before their visit. Tourism related websites are advertised in the international online media to attract tourists. However, when they want to make a hotel reservation to ensure that they already have a place to stay before visiting the country, it is not possible. Similarly, products like coffee and carpets that are exported abroad cannot be advertised properly. The major reason for this is the lack of an online payment system.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What can the advertisers do in order to benefit from the changes of media technology convergence?</strong></p>
<p style="text-align: justify;">
	We need to invest in e-commerce. This can help local businesses to reach customers around the world. Lack of an online payment system is a loss for tourism-dependent <strong>businesses like hotels and travel agencies as well as the exporters. The payment taking mechanism is difficult which is why the online advertising is not fully developing.</strong></p>
<div style="background:#fcf88d;padding:5px;">
	<p style="text-align: justify;">
		<strong>The Paradigm Shift</strong></p>
	<p style="text-align: justify;">
		There has also been a shift in terms of media’s target consumers. Traditionally, the primary market was the target of media companies. The primary market included television viewers, radio listeners, website surfers, and newspaper and magazine readers. While the secondary market includes the marketers, the competing companies and other media as well. There has been a convergence in these two groups as now they both are targeted equally by the media companies.&nbsp;</p>
	<p style="text-align: justify;">
		Sanjay Golchha is also involved with Mindshare Nepal, which is a digital marketing company, the first of its kind in Nepal. It is the authorized agent for GOOGLE in Nepal and works in close relation with the businesses companies of Nepal. They are involved in Search Engine Marketing (SEM), which is the biggest source of online advertisements. They are also focusing upon social engineering, advertising the tourism and travel websites as well as promoting export products online. Currently, their major focus is upon providing email-marketing services to the local businesses. &nbsp;Mindshare Nepal Pvt. Ltd. collaborates with two companies who are experts in Software (IT Nepal) and marketing (Linez). Email marketing allows the businesses to reach thousands of people with a single message and see their response instantly.&nbsp;</p>
</div>
<div>
	 </div>',
			'published' => true,
			'created' => '2013-03-24',
			'modified' => '2013-03-24',
			'keywords' => '',
			'description' => 'The impact of media convergence can be seen soon. But, for this the Internet bandwidths should be cheaper and the Internet should be more accessible to the people.',
			'sortorder' => '778',
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	(int) 9 => array(
		'Article' => array(
			'id' => '895',
			'article_category_id' => '40',
			'title' => '‘Companies Should Focus On Building Brands, Not On Selling Units’',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong><img alt="Abhaya Pandey" height="254" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_abhaya.jpg" width="250" /><br />
	</strong><strong>Abhaya Pandey</strong><strong>Advertising Professional</strong></p>
<p>
	 </p>
<p style="text-align: justify;">
	<strong>How is media convergence affecting Nepal’s advertising industry?</strong></p>
<p style="text-align: justify;">
	Online Media is an example of the impact of Media Convergence in Nepal but it has not been able to make a significant impact yet. There are very few Internet users. We are still relying on the digital media as the prominent source of advertisement. &nbsp;</p>
<p style="text-align: justify;">
	<strong>How has Social Media Education (SEM) changed over the years?</strong></p>
<p style="text-align: justify;">
	While social media education advertisements were mostly like BCC (Behaviour Change Consumerism) previously, today ad literacy has increased. This also requires more ad communication experts to convey social educational messages in an entertaining manner. The challenge today is not only giving information but also persuading consumers to buy the product or the message. While traditional media required information education, today information has to be conveyed through entertaining ads that can easily grab the people’s attention. Education is possible through entertainment only. Functional value is changing. Humour, fear campaigns, sensationalization etc should be embedded into ads to make them both entertaining and educational. Only educational ads will make people switch between TV channels. The government, NGOs and INGOs should be more responsible towards SME.</p>
<p style="text-align: justify;">
	<strong>How is the “Brand Personality” of a company reflected in its advertisements?&nbsp;</strong></p>
<p style="text-align: justify;">
	Sixty per cent of the total cement consumed in Nepal is produced in Nepal; only the remaining 40 per cent is imported. This clearly suggests a lack of competition in the domestic market. Many companies are trying to establish their brand names in the cement industry but special emphasis has not been placed in making better advertisements for those brands. The richest organizations of Nepal, the banks are limited to the urban areas and are yet to reach the villages. Hence, there is not much competition in the banking sector as well. Brands are classified in terms of the advertisements that they demand. Clients should think long-term. They should focus on building brands and not only on selling units. The market of instant noodles can be called competitive and this is reflected in &nbsp;their advertisements as well. People can easily associate more with the noodle brands than with others.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What is the biggest challenge in the advertisement sector today?</strong></p>
<p style="text-align: justify;">
	The biggest challenge for Nepali business companies is to use advertisements to grab the people’s attention first and then to convey the message of the brands. Some ads are very descriptive which makes them absurd instead of creative. This can lead to a disconnection between the brand message and the advertisement message. It’s only a tool. Ideas combined with technology are necessary to create better advertisements and awesome brand images. The market is changing from supply-oriented to demand-oriented. More competition and professionalism is required in the corporate houses. Only after these basics are met, the companies can focus on creativity and design of their brands. If the brands and production companies start focusing upon brand image today, they will be able to stand out even 25 years from now. Glossy ads are not always creative ads.</p>
<div style="text-align: justify;">
	 </div>',
			'published' => true,
			'created' => '2013-03-24',
			'modified' => '0000-00-00',
			'keywords' => '',
			'description' => 'Online Media is an example of the impact of Media Convergence in
Nepal but it has not been able to make a significant impact yet.  There are very few Internet users. We are still relying on the digital media as the prominent source of advertisement.',
			'sortorder' => '777',
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	(int) 10 => array(
		'Article' => array(
			'id' => '894',
			'article_category_id' => '40',
			'title' => 'Media Convergence: Impact On Business',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p style="text-align: justify;">
	<span style="text-align: justify;">Media convergence is a theory, and subsequently a practice, in communications where every mass or niche medium eventually merges with each other to the point that they are indistinguishable from each other, creating a new medium from the synthesis, due to the advent of new communication technologies. With the advent of new medium over the Internet and the mobile, media convergence is now an increasing reality in the Nepali media and entertainment industry.&nbsp;</span></p>
<p style="text-align: justify;">
	A prominent example of media convergence in Nepal is the online media. It has had a significant impact upon the conventional print and broadcasting media. Globally, it has proved to be very influential. In the USA and other developed nations of the world, everyone uses advanced technologies such as &nbsp;iPhone, Blackberrys and other gadgets that help them stay updated every second. People do not wait for the next day to read the newspapers. The online news portals get updated every minute with new news flowing in. According to Suresh Prasad Aacharya, Academic Advisor at the Shepherd College of Media Technology, such an example can also be seen in Nepali radios. Radios provide news bulletins every hour. The same news is followed by the televisions and is viewed by the audience in the evening.&nbsp;</p>
<p style="text-align: justify;">
	The online portals also update the news. Next morning, almost the same news is printed in the newspapers. Again, the radios conduct programmes in they which repeat the same news they broadcast a day ago. Hence, a cycle of convergence can also be seen in Nepal as the news reports get reproduced again and again by various forms of media. This is beneficial to the media consumers as they can stay updated through various forms of media. But this process weakens the media houses. Reporters can also benefit from this cycle. Most of the print media located outside the valley use online sources for the news. &nbsp;</p>
<p style="text-align: justify;">
	<strong>Challenges in Convergence</strong></p>
<p style="text-align: justify;">
	While the industry at large is excited about media convergence, it also has its share of concerns. The unanimous one is the lack of adequate bandwidth. The bandwidth cost is too high and needs to be brought down drastically. In Nepal, Internet usage is very low. The fact that 18 per cent of the population uses the Internet is exaggerated. Hence, this makes it difficult for the media companies to use the Internet to communicate with their audience. Only 5-6 per cent Nepalis have been able to make effective use of the Internet. &nbsp;In Korea, there are half-a-million subscribers who receive 11 channels live on their mobiles. Only when there is enough bandwidth, can the business be ramped up.</p>
<p style="text-align: justify;">
	The other challenge is educating consumers to use the various new media. The latest technologies such as HD camera and the latest software are not being utilized to the full extent. &nbsp;Though we capture advertisements in HD (High Definition), it is shown in SD (Standard Definition). This has been making a little difference in quality but the full potential of technology remains unexplored. Consumers here have some access to the latest technological goods but consumer education for their proper usage is not being encouraged. The industry will not grow unless the consumer is educated and aware of the available technologies and their usage.</p>
<p style="text-align: justify;">
	Apart from reaching consumers at various touch-points through convergence of the media, companies are also looking at it as a media to cater to the individual needs of consumers. And for this, the need of the hour is to generate adequate content. The Nepali media lacks the competition to generate adequate content. Producers are not compelled to make better advertisements. Advertisements are reflections of the competition among the brands. The clients want only glossy ads. They have a conservative mentality, as they want to stay 125 per cent secure. They prefer traditional, tried and tested methods that are still selling. Bringing creativity in media and advertisements requires more courage and clients by nature want security. Content availability has not kept pace with the changing consumers. Content generators have to generate enough to cater to individual tastes.&nbsp;</p>
<p style="text-align: justify;">
	Another perspective to the challenges is the industry - one where companies need to be more and more competitive in their marketing and product strategies. For this, they need to constantly innovate new products and therefore, reallocate an increasing amount of resources to research and development. Looking at the TV commercials in Nepal, one can easily see the lack of competition to generate adequate content Most of the commercials are that of FMGC (Fast Moving Consumer Goods). These markets are somewhat competitive and thus they focus on generating enough content to attract their consumers. However, for the products with uncompetitive market, the need to make the extra effort is not felt. This can result in the lack of contents in media. As more companies compete, the gestation period for newer products also decreases with each product life cycle. Companies should not only concentrate on selling units but also on creating a brand image.</p>
<p style="text-align: justify;">
	Finally, the lack of multi-skilled professionals in the newer arenas of business makes it difficult for the company’s old guard to let go of draconian or obsolete practices. This ultimately leads to turf wars over domain control. Convergence along with technological advancements has brought a tough competition in the media market. However, the level of seriousness is still very low. Acharya shares, “There is stiff competition &nbsp;to be the first to give the news to the audience but the accuracy and credibility of the news is lacking.” The skill demanded by Media Convergence is not being provided. He further says, “A computer literate media person is not good enough. We are using computers as typewriters and to get access to news only. Modern forms of technology should be better utilized. More creativity can be presented by using them which is not being done”. Nepali media is not fully aware about media creativeness. “Media are aware but not serious because they use online media for their convenience right now but they are not making long term assessments,” he says. In a period of 10 years, only the fittest will survive. His only request to media editors and directors is that they should stay updated with latest trends in media through training or orientations. &nbsp;</p>
<p style="text-align: justify;">
	<strong>Market and Technology Convergence</strong></p>
<p style="text-align: justify;">
	By plotting time against portability and interactivity and at the same time, selected parameters that might be called the benchmarks of technology progress namely moving image, computing, voice communication and games, we can get a historical perspective as well as deduce where the combined technologies are headed.&nbsp;</p>
<p style="text-align: justify;">
	However, in this case of mapping, the word convergence is never intended to suggest replacement (i.e. not everything is moving to one entity or point). All of the elements on the charts are still in existence and, except for VHS and DVD, will be around for a good while. We also see ‘divergence’ of media forms as it morphs across a sea of devices that continue to grow, layer upon layer.&nbsp;</p>
<p style="text-align: justify;">
	All technology makers and marketers would like to know what the next will be. In the portable domain will we always have separate phone and serious gaming device? We are already seeing the merging of the phone, organiser and media player (4GB phones are already in the market) – given you can dock these portable devices to the larger screen, carry all your content and that they can receive high definition TV, do we need fixed devices at all?&nbsp;</p>
<p style="text-align: justify;">
	<strong>Technology Convergence in Nepal</strong></p>
<p style="text-align: justify;">
	iPhone can be used in Nepal but it cannot be fully utilized. The phone clearly denies the user an access to its online stores by saying that the service is not supported in the region. This is due to the lack of an online payment system. On the contrary, Nokia phones are developing local contents for Nepal. Microsoft also provides Nepali language fonts for usage. However, the customers can use only the free services and not the priced contents. This can result in slow usage of technologies also. The telecom companies should be involved in this business. Both Ncell and NTC are providing mobile Internet service. This helps the users to use more social entertainment sites and random online contents but making full use of the latest technological innovations is difficult. Ncell has come out as the market leader with its gorgeous advertisements and user-friendly services. However, the customers want more.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Convergence of Understanding, Practicing and Innovating</strong></p>
<p style="text-align: justify;">
	Increasingly, one can observe a definitive trend in the convergence of understanding, practicing and innovating in the competitive marketplace where each participant is eying the largest chunk of the pie. Understanding the needs of the consumer has taken on a new importance with extreme segmentation and fragmentation in the marketplace. Identifying this need and creating a new product or service to fill this gap has gained prime importance, more so akin to a rasion d’être for the companies. From high value-high involvement products like home loans and automobiles to low value-low involvement products like detergent powders and toothpastes to soft drinks, companies are increasingly spending huge amounts of money to understand the patterns and motivations of the consumers for selecting, purchasing and using a certain brand.&nbsp;</p>
<p style="text-align: justify;">
	Even more important, the brand association that the consumers make with a certain brand can make or break the brand equity of a company’s product and the difference between success and failure of the product in the market. A constant drive to innovate and come out with better products is reflected in the ever-increasing amounts of R&amp;D spending of the companies. For example, high technology products like Nokia’s mobile handsets are made based on a constant feedback on usage and understanding of mobile phones by the customers. This has led to the incorporation of higher levels of innovation and user-friendliness in the next handset made by Nokia.</p>
<p style="text-align: justify;">
	A new concept on the horizon is co-creating value. This happens between the consumer and the manufacturer. The manufacturer actively seeks the cooperation of the consumer for creating new products.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Convergence of Creativity/Design with Technology and Business Sense&nbsp;</strong></p>
<p style="text-align: justify;">
	It wasn’t a long time ago when even the top copysmiths of advertising like Neil French used to write copy for ads and fit them in typesets for printing. Nowadays, even a copywriter in a small agency in a small town will type out the copy quickly on the computer and the graphic designer will fit it into the ad’s layout and send out the soft copy to the newspaper for printing. Technology innovation from typewriters to computers has made this shift possible. A school student with a typical Pentium desktop computer has, at his disposal, more computing power than NASA had when it sent the first man to the moon. The great enabler in this case, technology, is progressing with such rapid pace that the latest, most cutting-edge technology is rendered almost outdated within a few months of its release. Creative visualisers using advanced software like Adobe Photoshop and CorelDraw are daily creating breathtaking graphical masterpieces that would have taken even a Leonardo da Vinci months, if not years, to create.</p>
<p style="text-align: justify;">
	Convergence in technological standards like image formats (jpegs, gifs, etc.), audio-video formats (mpeg, avi, etc.), audio formats (mp3, wma, etc.), and so on, combined with interpolability and compatibility to use, share and transfer this data (USB, flash drives, DVDs and other optical storage) has created a powerful technology-design combo that professionals across the world are using in physical form as well as virtual form (cyberspace – Internet). Add to this, the keen entrepreneurial mind of a businessman and you have technology monoliths like the Times Group and others like AOL-Warner, Sony and Apple amongst many others who dominate the commercial landscape. Convergence is changing the way people live their lives on a daily basis.&nbsp;</p>
<div style="text-align: justify;">
	<div>
		<strong>Convergence of Classroom (Brick &amp; Mortar) with Internet (Click &amp; Portal) and Learning by Doing (Experiential): Experiential Brick and Portal&nbsp;</strong></div>
	<div>
		 </div>
	<div>
		<img alt="Midas EClass" height="86" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_midas_class.jpg" width="217" /></div>
	<div>
		Traditional classroom model has been in an evolutionary phase ever since technology innovations have made networking possible. Satellite communications like VSAT have enabled hundreds of thousands of students across the world to virtually attend lectures. The University Grants Commission (UGC) has empowered students in India because of this education and technology convergence. In professional courses, the emphasis has always been on practical knowledge rather than just theoretical inputs. The value addition to the professional skills development is far more when students are exposed to theories and their practical applications. Added to this is the new dimension of Internet learning. Numerous universities, colleges and institutes, especially in Western Europe and North America, are now offering degree courses through the Internet. This dissolves all cultural, geographical and social barriers for people who cannot afford the time and/or money to attend full time courses in foreign countries. The effective combination of these three models of learning- traditional classrooms, Internet and practical experiences, has become necessary for the students of today to become successful professionals of tomorrow.&nbsp;</div>
	<div>
		 </div>
	<div>
		Nepal is moving towards using technology for education, replacing the traditional “Chalk and Talk” method. Midas Education, a pioneer in the development of ICT (Information Communication Technology) in the education sector, encourages interactive teaching and learning. Students make use of PowerPoint presentations and other IT tools to enhance their skills and be prepared for the modern world. To bring a drastic change in the education sector, growth of ICT is very important. Information flow is unavoidable today due to the Internet and students are using GOOGLE for their education along with textbooks. The next challenge for Midas Education is to take ICT to the villages but as anyone can imagine, it is not an easy task. Use of ICT increases accuracy and quality of education and saves valuable time. Thus, ICT is necessary to modify the existent education pattern and to develop it.&nbsp;</div>
	<div>
		 </div>
	<div>
		Initially, it is difficult to use a new technology and learning it might take some time. But, as soon as we get used to it, there are only benefits to enjoy. Technology makes life comfortable and fast. The real beneficiaries of technology in Nepal are the students. Technology has been making their lives easier. They can easily grasp vague concepts. They do not need to mug up their course books these days; they have a chance to present their creativity. Along with the students, teachers are also benefiting.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in Media Consumption &amp; Media Buying</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		There was a time when you had simple choices to make – like choosing one newspaper from the three or four available, one radio station, one television station that broadcast only in the evenings, a couple of magazines from half a dozen available and so on. As the market kept segmenting and fragmenting, we now have thousands of radio stations to choose from with WorldSpace, Star TV itself telecasting more than half a dozen channels round the clock, there are more than a couple of dozen newspapers to choose from, hundreds of magazines to choose from and the story does not end there. With the advent of newer technologies, we now have newer channels of communications like mobile, Internet and direct-to-home television along with exponential storage capabilities on optical media like CDs and DVDs. Today, a typical consumer is bombarded with more than 1,000 messages per day. Marketers are finding newer ways and means to target the consumers.&nbsp;</div>
	<div>
		 </div>
	<div>
		One limitation for media consumption and media buying for Nepali consumers comes from the frequent load-shedding. This problem also makes an impact on the convergence cycle. The current trend is that the media houses are using all forms of media from print to radio to TV to online portals. One form of media is subsidizing the other. During the winter season, when the load-shedding is at its peak, advertisements in the TV decrease significantly to only 25 per cent as compared to the summer season. However, while the TVs are suffering from losses, the ads in the radio increase. Thus, radio subsidizes TV. Image Channel initially owned two TV stations: Image Channel and Image Metro. Now, it has replaced Image Metro with a new radio station, Image News, while the already existent Image FM still exists. This is an example of merging different types of media in one window, which is possible due to media convergence.&nbsp;</div>
	<div>
		 </div>
	<div>
		Another example of convergence in media consumption is the way in which consumers actively hunt for information. 3G mobile handsets are designed for high speed Internet connections and the user opts to use them in a variety of ways; like checking the online navigation to watch out for traffic jams, weather forecasts, locating the nearest fuel station, hospital or even a restaurant; everything is possible with the mobile handset. It also backs up as a personal information manager (PIM), a music player, a camera and a portable gaming device. Internet usage on the phone is aiding to media consumption but many people cannot afford it.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in Media Ownership</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		A massive diversification of media, thanks to the Internet, materialized by millions of websites, fora, blogs and wikis is taking place. That evolution, often labelled citizen journalism or citizen media, makes it possible for practically everybody to be a media creator, owner and actor, instead of a passive user.&nbsp;</div>
	<div>
		 </div>
	<div>
		With the technological advancements, convergence is expected to take various new forms. One form of media subsidizes the other and this poses a risk of developing a media tycoon. Currently, the Kantipur Media Group can give a run to the state media monopoly. It has an online news portal, a TV channel and radio broadcasting stations along with print media of daily and weekly newspapers, and monthly magazines. It is also considered the fastest and most reliable source of news. This has all been possible due to the proper utilization of technology.&nbsp;</div>
	<div>
		 </div>
	<div>
		Some of the largest media conglomerates in the world include American Media Inc., Bell Globemedia, Bertelsmann, Canwest Global, NBC Universal, Hearst Corporation, Lagardère Media, Liberty Media, News Corporation, Grupo PRISA, Rogers Communications, Sony, Time Warner, The Times Group (distinct from Times Newspapers of News Corportation), Viacom (owned by National Amusements), CBS Corp (also owned by National Amusements), and The Walt Disney Company.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Convergence in the Interests of Dual Markets&nbsp;</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		As more and more companies across industries look at multiple media platforms, especially the digital media, it is also emerging as a revenue-earning model for most of them. Also, e-commerce is growing rapidly and a host of companies are setting up online shops across portals.&nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Two sides of Media Convergence</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		With freedom, come the responsibilities. Media convergence has made a positive impact upon the advertisers. They only need to buy a small space in the websites and their ads get displayed 24 hours a day for as long as they want. The ads on the TV and newspapers last for a shorter period and are comparatively more expensive than the online ads. The design of the advertisements can also be changed from time to time. Also, the growing trend of media houses trying to use all forms of broadcasting media and print media makes it possible for the advertisers to negotiate rates. Their marketing is now more cost effective than before. They can easily use different tools of media and show their advertisements to their consumers through websites, TV, radio, as well as newspapers.</div>
	<div>
		 </div>
	<div>
		The Interim Constitution provides publication and broadcasting freedom to media but again imposes certain restrictions that allow the media to enjoy only the relative freedom. The online media however does not follow these rules and regulations. Online media has no monitoring system and in today’s world, the flow of information is difficult to stop. Hence, news that can be harmful should be stopped from spreading.&nbsp;</div>
	<div>
		 </div>
	<div>
		The definition of media is not the same as it was a decade ago. Facebook is an example of this. This new social media has influenced us largely. Now, every citizen is a reporter as he or she can constantly update news through Facebook. The news about Paras Shah getting a heart attack was published in the Facebook before any other media houses could print or broadcast it. Technology is responsible for this. While 10 years ago, technology turned the world into a global village, today it has changed the world into a global family. If a person in Nepal gets married today and updates his photos on Facebook, his friend in the US can see the photos. This ignores the geographical boundaries and aids in sharing cultures between people of different nations. Thus, it has been making a positive impact worldwide.&nbsp;</div>
	<div>
		 </div>
	<div>
		When the Royal Palace Massacre took place in 2001, &nbsp;a rumour was spread saying that somebody had mixed a poison in the water coming from the Water Supply Tank in Sundarijal. That was a time when people had no other forms of communication except for the landline phones at their homes. If that was enough to discourage many people from drinking water inside Kathmandu valley, we must think how effective can such rumours be today. We have all the powerful tools of communication from mobile phones to the Internet and it will take only seconds for such rumours to spread. &nbsp;Hence, with media convergence, self-regulation is required. People are required to be more responsible. Ill-intended propaganda and rumours should not be published.</div>
	<div>
		 </div>
	<div>
		<strong>Future Impacts</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		It is certain that over the next five years, technology will not remain the same. Newer versions will be available that will bring about more revolutionary changes. Hence, impact is a vague word in future terms. With changes in technology, the working processes will change which will provide the necessary opportunities towards beneficial transformations. The use of the latest technology produces beneficial products but education regarding technology is a limiting factor for a country like ours. With around 50 per cent of the graduating population having some form of knowledge regarding Information Technology (IT), it is not an impossible challenge. However, the business owners and leaders have the responsibility of encouraging this population for increased use of IT. &nbsp;</div>
	<div>
		 </div>
	<div>
		<strong>Media Education: Need for a Paradigm Shift</strong></div>
	<div>
		<strong><br />
		</strong></div>
	<div>
		<img align="left" alt="Media Education" height="139" src="http://newbusinessage.com/ckfinder/userfiles/Images/march2013_cover_story_media_education.jpg" style="margin:0 10px 0 0;" width="200" />The world today is in the midst of one of the most dramatic technological revolutions in history. It is effecting changes in everything ranging from the ways we work, communicate commerce and spend our leisure time. The technological revolution which is underway centers on computer, information, communication, and multimedia technologies and may be seen to be the beginnings of a knowledge or information society. In such a society, education has a central role in every aspect of life. The proliferation of communication-information technologies poses tremendous challenges. It compels educators to rethink their basic tenets and to deploy the media in creative and productive ways. It forces them to restructure ways of learning-teaching to respond constructively and progressively to the technological and social changes that we are now experiencing.&nbsp;</div>
	<div>
		 </div>
	<div>
		Midas Education has been contributing to the development of ICT for education for about 12 years now. This continuous growth of Midas comes from continuous positive responses and moral support they got from their customers. Just like the processors developed in recent years from Pentium IV to i7, adding more layers in their newer versions, Midas has also been adding layers in their work to promote the use of ICT in the education sector. &nbsp;Raju Baniya, Business Manager of Midas Education, says, “This has improved our results year on year. We started with making self learning CDs and now we are trying to transform the class rooms.</div>
	<div>
		 </div>
	<div>
		As a consequence of information super highway and communication technologies, media and communication education have undergone almost unbelievable changes. The old lines between disciplines are becoming obsolete. The work of professional communicators is undergoing a dramatic change. Resultantly, there are likely to be very few belonging to one discipline which might be conversant with all forms of media in the days to come. With such metamorphosis of the professions underway, it is a real challenge to prepare students for successful professional careers in the era of convergence and connectivity of the variety of media.&nbsp;</div>
	<div>
		 </div>
	<div>
		In an era characterized by convergence of technologies the need for skilled media professionals who understand the foundation, both ethical and practical, from which they need to work, becomes even more critical. But without adequate training in new media skills, the goal will remain unachievable. This crisis in media requires to be addressed in the class room where young professionals are molded and sculpted. But to meet the needs of the fast growing media industry, an ongoing training is vital to ensure that those working in the field have to grow and develop. This entails broadening, updating and upgrading the core component of the media education at various levels.&nbsp;</div>
	<div>
		 </div>
	<div>
		What media students today need is nothing short of a leading-edge education suited to the needs of networked globalised industry. This would involve greater accent on fundamental concepts, values and skills needed to prepare them for communication careers commensurate with unprecedented changes. They need be fully equipped to understand the whole of communication scenario, be able to solve problems and imbibe the ethical and legal implication of media and communication which will let them be comfortable with innovation and working in concert with their peers. The object of the new media education is to prepare students for leadership roles in their professions and in their communities.&nbsp;</div>
	<div>
		 </div>
	<div>
		With a view to achieving the object of quality media education, the institute of Mass Communications are in dire need of reconfiguring and updating their curriculum to produce graduates who are prepared for future leadership roles in the media and communication industries and who are able to communicate across disciplines and in multiple media formats. This for providing students with strong core content in critical thinking, research and analysis, information gathering, writing, graphics and design, and law and ethics and the latest media technology and skills. It is not always possible for teachers to take students to lab to conduct required educational activities. Similarly, the task of taking students for field visit for practical knowledge is also not possible every time. In this context, the MiDas eCLASS offers audio-visual contents that complement the lab activities and field visit to enable the students to gain real-life experience.&nbsp;</div>
	<div>
		 </div>
	<div>
		The media education departments must offer to their students fully computerized reporting and editing classes, and create totally digital classroom and laboratory systems. They must orient themselves to revise their journalism curriculum and always be ready to undergo continual adjustments in response to changes in the profession. Far from print and broadcast sequences running separate, as is the case today, students in the two sequences need to plan news coverage together and work together in the labs. Tomorrow, it is quite likely that the sequences might disappear and students will be required to work seamlessly on stories for print, electronic media and the Internet – or whatever systems will exist in the future.&nbsp;</div>
	<div>
		Same is the case for students of marketing communications who need to integrate the different tools of branding and marketing: advertising, public relations, event management, digital marketing, direct marketing, etc, before specializing in one functional area.</div>
	<div>
		 </div>
	<div>
		For entertainment media students, it is significant to integrate skills for the entire entertainment industry: from television to cinema, from radio to digital entertainment, from events to musicals, etc.</div>
	<div>
		 </div>
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			'description' => 'With the advent of new medium over the Internet and the mobile, media convergence is now an increasing reality in the Nepali media and entertainment industry.',
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			'id' => '874',
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			'title' => 'Insuring Nepal’s Aviation Risks',
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			'content' => '<p>
	<strong>By Sushila Budhathoki</strong></p>
<p>
	<img alt="Cover Story February 2013" height="329" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013.jpg" width="550" /></p>
<p style="text-align: justify;">
	<span style="text-align: justify;">“The higher the risk, the higher the potential return,” goes a popular saying. The economic logic is however that the profit is higher when risks are minimized. And there comes the insurance business to help the other businesses to reduce risks. In the process, both insurance companies and their business clients become happy. But this does not seem to be the case in aviation portfolio of Nepali insurance companies. &nbsp;Although aviation insurance is a high profile business in Nepal, it happens to be one of the weakest portfolios for most insurance companies in terms of profit. The aviation insurance business looks good in terms of premium collection but there is hardly any profit.&nbsp;</span></p>
<p style="text-align: justify;">
	The reason is: the insurance companies providing aviation insurance have to pay a high amount of premium – more than 99 per cent at times - to the reinsurance companies abroad. In fact, the companies are sustaining their aviation insurance business from the commission they get for the premiums paid to the foreign reinsurers. Mahendra Shrestha, Managing Director of Himalayan General Insurance, says, “Whether it’s profit or loss, it goes to the reinsurance companies. We (local insurance companies) are just the intermediaries. And if we fail to reinsure, we cannot sustain the operation. So, we have to depend on reinsurance companies abroad. There is no other choice.”According to Shrestha, some insurance companies are paying up to 99.97 per cent of the premiums collected to the reinsurance companies. “It has been a non-profit business for even most of the reinsurers who have only two choices - walk away or keep doing business at high premium rates to recover previous losses,” he adds.&nbsp;</p>
<p style="text-align: justify;">
	A three-year data (From 2009/10- 2011/12) of Beema Samiti, too, depicts the pathetic condition of Nepali insurance companies in aviation portfolio. During this period, only a few companies could make some profits which however, is paltry (See table 1). Rameshwor Thapa, President of Airlines Operators Association of Nepal (AOAN), says, “Since this is a highly regulated and risky business, there can be loss or profit and the clients also contribute in both these factors.” There are altogether 25 insurance companies including 17 non-life insurance companies in Nepal. Among the non-life insurance companies, seven &nbsp;deal in aviation insurance (See table 2). Nepal insurance Company Ltd and Neco Insurance which were doing aviation insurance previously have pulled their hands from aviation portfolio now.</p>
<p style="text-align: justify;">
	Lack of domestic reinsurance companies and low retention capacity of Nepali insurance companies has resulted in huge amount going abroad as remittance premium. The Nepali airlines are paying around USD 8-9 million premiums to the insurers yearly. The Nepali insurance companies retain 0.5 per cent of this and send the rest to the reinsurance companies.&nbsp;</p>
<p style="text-align: justify;">
	Dip Prakash Panday, CEO of Shikhar Insurance, says, “The way our aviation business has been exposed, we cannot afford the risks. Who will bear the risk if some big loss occurs?” Panday asks, adding, “We are not sending money, we are transferring the risk. The &nbsp;companies are still in profit because the money is flowing in from the reinsurers abroad as commissions. Since they agreed to take the risk, they bear the loss as well, when it happens.” Shikhar Insurance, &nbsp;one of the major players of Nepal’s aviation insurance business earned Rs 10.5 million as reinsurance commissions last year.&nbsp;</p>
<div style="padding:10px; background:#f4f3e6;">
	<strong>Nepal’s First Aviation Insurance Summit&nbsp;</strong></div>
<div style="padding: 10px; background-color: rgb(244, 243, 230); text-align: justify; background-position: initial initial; background-repeat: initial initial;">
	<img align="left" alt="Aviation Insurance Summit" height="173" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(2).jpg" style="margin:0 10px 0 0;" width="300" />Held In January, an ‘Aviation Insurance Summit’ was held in Kathmandu where all the stakeholders including the reinsurance companies participated. The summit brought about a fresh wave of optimism in Nepal’s aviation insurance sector. Mahendra Shrestha, MD of Himalayan Insurance, who was also in the organizing committee says, “The Summit brought local stakeholders, including operators, regulatory bodies, insurance companies and banks as well as key players in the regional and global aviation insurance industry including underwriters and reinsurance brokers under one roof. It gave the Nepali stakeholders a global perspective on our current situation as well as access to the expertise of visiting delegates.” He further adds, “After the summit, all the delegates expressed that they found it to be a helpful introduction to the Nepal aviation insurance market and that it helped them take better decisions about supporting it.”</div>
<p style="text-align: justify;">
	 </p>
<p style="text-align: justify;">
	Airlines insure their fleet according to the value of the aircraft. The reinsurers charge different premiums depending on the type of aircraft, experience of the pilots and engineers, infrastructure, equipment, management facilities and age and the value of the aircraft. Aviation insurance coverage is categorized into the following types: Hull, War, Allied, Perils Insurance, Third Party Liability Insurance, In-flight insurance, Passenger liability insurance etc. The passengers are insured at USD 20,000 each and crew member at USD 40,000 each while the coverage of other categories like hull, war etc varies from airline to airline. According to the operators, the reinsurance market in Nepal was dependent on the India for a long time since it started in the early 1960s. In recent times however, as both the risk and the premium witnessed a constant upsurge, the market shifted to Europe. Indian Insurance companies like GIC, ICICI Lombard, United India and IFFCO-TOKIO were the main reinsurance partners of insurance companies previously, but the number of Indian reinsurers who do reinsurance business in Nepal has decreased over the past few years. &nbsp;</p>
<p style="text-align: justify;">
	<strong>High Premium</strong></p>
<p style="text-align: justify;">
	After the 9/11 terrorist attack in the US in 2001, where two planes - American Airlines Flight 11 and United Airlines Flight 175 - were crashed into the North and South Trade Towers, the aviation sector saw a sudden rise in premiums globally. After the incident, most of the reinsurers increased their premium rates worldwide while others loaded the premium according to the risk factors. Nepali airliners are charged up to 12 per cent premium now while airliners generally pay 4-6 per cent internationally. Previously, the premium rate for Nepal was up to 7 per cent. Thapa says, “We used to pay USD 30,000 as &nbsp;premium as early as six years ago. Now we have to pay USD 300,000 for the same aircraft – 10 times more than the premium rates in the past.” Currently, Tara Air and Agni Air are paying up to 12 per cent premium. However, Panday says that the premium rates differ from airline to airline. He says, “It is not that all airlines have to pay a high premium. The premiums of some airliners are as low as 1.5 per cent.”&nbsp;</p>
<p style="text-align: justify;">
	There are many conditions when the reinsurers charge high premium. They charge more if they discover that the airliners have had an air accident in the last five years or have a high frequency of making claims. Prem Bahadur Maharjan, Chaiman of Rastriya Beema Sansthan (RBS), says, “The risk factor is not within our control and that needs to be reinsured with other international insurance companies outside the country.” Decrease in the number of airlines due to the crashes and age of the aircraft lead to also high premiums. Prof Dr Fatta Bahadur KC, Chairman of Beema Samiti, says, “We had had the normal rates. But when one reinsurer increases the premium rate, others follow suit. Now the weakest airliners have to pay dearly while others too are paying high charges.”&nbsp;</p>
<p style="text-align: justify;">
	As Nepali aviation insurance is serviced by the international reinsurance market, rising premium rates is affecting the sustainability of the business. As the risk increases the market becomes limited and the airliners have no choice but to accept the high premium rates. Kewal Krishna Shrestha, CEO of Everest Insurance says, “The aviation business is running though the reinsurers are charging up to 12 per cent. But what if they charge 20-25 per cent? I don’t think the aviation industry in Nepal could bear such high premiums.” He says the environment in future could be such that even the high premium might not draw the reinsurers into confidence because of the high risk involved in the Nepali aviation and that the reinsurers could add more clauses which could affect the overall aviation business in Nepal.&nbsp;</p>
<p style="text-align: justify;">
	The reinsurers, however, insist that the premium is always determined by the risks anywhere in the world. According to Dr Pronab Sen, CEO of Nepal operation of National Insurance Company, the government-owned insurance company of India, the premium is based on the past losses. He says, “If you see the statistics, almost every year there is a crash and sometimes, there are 2 crashes in Nepal. And the rate of premium is governed by the reinsurance market. Because of the air accidents, some of the reinsurers were hesitant to do business in Nepal.” Sen adds, “We have our own retention limit. Depending on our financial strength, we retain a very small portion of the risk and reinsure the rest with other reinsurance companies. This is a worldwide practice in the insurance business. It depends on portfolio and risks. Sometime we retain 20 to 80 per cent- sometimes 90- depending on the risks.” Doug Horne, Marketing and Business Development Manager at Airclaims- A UK-based leading reinsurance company, shares a similar experience. He says, “The present level of risk is too high but there are enough insurers willing to support the market, albeit currently at a higher cost than in some other places.”&nbsp;</p>
<div>
	<img alt="Aviation Insurance Business" height="298" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(3).jpg" width="550" /></div>
<div>
	<div>
		<strong>The Risky Rural</strong></div>
	<div>
		 </div>
	<div style="text-align: justify;">
		The airlines which fly mostly in the hilly region are among the high premium paying ones. On the trunk routes, the premium is only around 3-4 per cent and in the case of STOL (Short Take Off and Landing) runways, the premium rate varies from a minimum 3 to a maximum 12 per cent. Due to the risk in rural areas, the reinsurers load more premiums on them. According to the operators, the aviation insurance started becoming a loss-making business for reinsurers since 2009. There have been eight aviation crashes, killing 114 people in the past six years. Almost all these accidents took place in the hilly region. Of them, six deadly accidents occurred in 2011 and 2012 alone, excluding four helicopter crashes of which a couple were fatal. Being a mountainous country, the weather, terrain and the high altitude in the hilly region are the major challenges for the aviation sector. Poorly managed and small airfields, unpaved runways and lack of manpower to co-ordinate pilots in these areas are considered the reasons behind the air crashes. An aviation expert, requesting anonymity, says, “We need pilots who are well trained and have a sound understanding of weather pattern, especially clouds.”&nbsp;</div>
	<div style="text-align: justify;">
		The emergence of private airliners in domestic air transport started in 1992 when Nepal adopted a liberal aviation policy. And in 2002, expansion of the International Terminal Building at Tribhuwan International Airport (TIA) and the construction of a new Air Cargo Complex made it convenient for the international airliners to operate in Nepal. This increased the flow of international tourists in Nepal. Increased tourist arrivals, in turn, have led to a growth in the aviation business and aviation insurance business too. This is why the aviation insurance business has grown over &nbsp;the past decade. There are 10 fixed-wing airplane operators and five helicopter operators in Nepal at present. The Civil Aviation Report 2011-2012 also depicts a steady growth in the aviation sector with increasing flight movement.&nbsp;</div>
	<div style="text-align: justify;">
		There are altogether 54 airports in Nepal. Among them, 34 are operational at present. Among the running airports, eight are on the trunk routes- while the rest are in the remote areas. Thapa says, “Trunk route operators have fewer problems in comparison to the STOL route operators mainly because of the high hills and high altitude. There have been many instances of chopper accidents on the STOL routes.” Airports in Pokhara, Biratnagar, Janakpur, Nepalgunj, Bhairahawa, Kathamandu, Dhangadi and Chandragadhi are on the trunk route. The domestic aircraft which fly in trunk route have a minimum seat capacity of 15 and a maximum of 72 while the planes in STOL routes have minimum seat capacity of 9. &nbsp;Big aircraft fly on the trunk routes while the small ones &nbsp;are considered best for the hilly region. Suresh Acharya, Joint Secretary at Ministry of Tourism and Civil Aviation (MOTCA) says, “There is a high risk on the STOL route especially for twin-otters. There is an urgency to enhance the capacity of the pilots who fly on the STOL routes. ”</div>
</div>
<div>
	<div style="text-align: justify;">
		 </div>
	<div style="text-align: justify;">
		<strong>The aviation insurance cover</strong></div>
	<ul>
		<li style="text-align: justify;">
			Hull All Risk (Loss or Damage to the Aircraft)</li>
		<li style="text-align: justify;">
			Hull War</li>
		<li style="text-align: justify;">
			Passenger and Cargo Legal Liability</li>
		<li style="text-align: justify;">
			Crew Personal Accident</li>
		<li style="text-align: justify;">
			Pilots Loss of License</li>
		<li style="text-align: justify;">
			Third Party Liability</li>
	</ul>
	<div>
		<div style="text-align: justify;">
			<strong>Bad Image</strong></div>
		<div style="text-align: justify;">
			 </div>
		<div style="text-align: justify;">
			The frequency of accidents has created fear in the reinsurers’ minds, pushing Nepal into a ‘risk zone’. These accidents could have negative impact on the country’s tourism if the casualties included many foreigners. Nepali aviation sector had gone through similar hard times in the past too. Ten years ago when Maoist combatants set ablaze Fishtail Air’s helicopter in western Nepal, domestic airliners got notification from the reinsurance companies abroad that they won’t compensate the losses in case of any terrorist attack. &nbsp;Panday says, “Fear is a very dangerous thing. Our terrains are difficult, which has sent a wrong perception. Similarly, loss is also a perception and can be changed. All we need is 3 to 4 years of good loss ratio.”</div>
		<div style="text-align: justify;">
			The domestic airlines are often accused of poor maintenance of their airplanes and the pilots of not following the standard operation procedures. Similarly, it is said that there is often a lack of co-ordination between the&nbsp;captain and co-pilots. Acharya says, “According to our findings, human factor is responsible for 80- 85 per cent accidents. The remaining 15 per cent accidents are caused by failure of machine, bad weather etc. It seems that the pilots are not very efficient at taking the right decision in time of emergency or they do not make the maximum use of the cock-pit. Lack of co-ordination between pilots and co-pilots and no guidance from the ground people when the plane is flying is common.”</div>
	</div>
</div>
<div style="text-align: justify;">
	<img alt="Income and Expences" height="216" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/cover_story_main_feb2013(4).jpg" width="579" /></div>
<div style="text-align: justify;">
	 </div>
<div style="text-align: justify;">
	<div style="">
		Lack of consultation between the government and insurance authorities for resolving the key issues of the aviation sector has made the aviation business worse. Acharya says, “The government is unaware about the kind of image the reinsurance companies are making of Nepal. They should have believed the government’s aviation report.” He further adds, “We need to develop that kind of mechanism. We are ready to help whenever they need any support from the government. All we need to do is build that kind of mechanism where the government as well as the insurance companies could sort out the problems together.”&nbsp;</div>
	<div style="">
		The use of ‘old’ aircraft by some domestic airlines has only added to create a negative image of the Nepali aviation, though people in the industry and experts do not call it a problem. According to a Nepali scholar who has a Master’s degree in Aeronautical Engineering from Poland, not following the standard operation procedures by the aviation operators is the major drawback in Nepal’s aviation. He says, “It does not matter whether the plane is old or new; what matters is its scheduled as well as need-based maintenance.” Lack of distance measuring equipment (DME) at airports is another shortcoming for the country’s aviation sector. He adds, “Towers are more helpful in tracking the aircraft in the right way. However, most of our airports rely on windsocks &nbsp;to indicate wind direction and the relative wind speed. This is risky. Sometimes, there is no one in &nbsp;the towers at the airports to coordinate with the flying pilots.”&nbsp;</div>
	<div style="">
		An aircraft is generally considered safe until the deadline given by its manufacturer. There is a manual for every air plane and manual for flying hours including number of flights a day. The Beema Samiti issues, renews, dismisses the licenses of insurance companies, insurance surveyors and insurance agents. It has also been “working for the development, management and regulation of the insurance business in the country.” The BS 2067 Report of Beema Samiti has also recognized scarcity of skilled manpower, unhealthy competition among insurance companies and lack of reinsurance companies within the country as the major problems of the aviation insurance business. However, the Beema Samiti has not been able to address these problems properly. Maharjan says, “There has to be a strict monitoring mechanism for air traffic discipline and safety education to the people involved in the aviation business. Pilots should also be alerted against taking any sort of risks. Aviation safety is not related to money only; it’s about lives of people.”</div>
	<div>
		 </div>
</div>
<div style="padding:10px; background:#f4f3e6;">
	<strong>Utilizing Civil Aviation Academy&nbsp;</strong></div>
<div style="padding: 10px; background-color: rgb(244, 243, 230); text-align: justify; background-position: initial initial; background-repeat: initial initial;">
	If given due importance, the Civil Aviation Academy (CAA), the only training center for aviation related training in Nepal, could be beneficial to the whole aviation industry. CAA conducts basic, refresher, induction and recurrent trainings related to Air Traffic Control, Aviation Security, Fire fighting and rescue, CNS and others based on quality curriculum. Though it is the only state’s approved aviation training organization (ATO) in Nepal, the private sectors have failed to utilize them properly. Mahendra S. Rawal, Chief of CAA says, “Though we are also in the developing phase, we can still work together to develop expertise. Together we can either develop the infrastructure here or bring expertise from outside the country.” The CAA runs courses on Air Traffic Services (ATS), Engineering, Aviation Security, Aerodrome rescue and fire fighting among other five dozen courses ranging from knowledge based to competency based training.</div>
<p>
	 </p>
<p>
	<strong>The Way Forward</strong></p>
<p style="text-align: justify;">
	Mergers among insurance companies to increase capital base is regarded as one of the possibilities for enabling the insurance companies financially. The insurance companies are also trying to increase their retention capacity from 0.5 to 1 per cent which has spread positive message to their clients. There have been many progresses in Nepal’s aviation sector. From the month of Kartik, this year; Tourism Ministry has revised the provision of compulsory payment of 60 million dollar in third party liability to airliners during the registration time. CAAN has subsidized up to 8 million dollar to the airlines that fly to rural areas. An agreement was signed between the Government and CAAN for Capacity Enhancement Project of TIA under ADB loan in 2010. A safety audit was carried out in Nepal from 5 to 14 May 2009 according to the Universal Safety Oversight Audit Program (USOAP) as provisioned by ICAO and the Corrective Action Plan based on the flight safety. The findings of the audit have already been submitted to ICAO. Furthermore, a provision has been made to perform all activities in congruence with the concept of ICAO USOAP Audit Continuous Monitoring Approach (CMA).&nbsp;</p>
<p style="text-align: justify;">
	Tri Ratna Manandhar, Director General, CAAN says,” We have followed international standards in safety measures and the maintenance of aircraft is carried out as per the European standards- EASA Part-145. Buddha and Yeti airlines have already started it and others are in the process.” According to him an ICAO team is visiting Nepal in July 2013 for audit. He says, “After this ICAO audit, we will be able to prove that we have made progress in aviation management including the safety.” CAAN has been conducting strict safety programmes for safety and maintenance for the past six months. Likewise, the board of CAAN approved Air Operator’s Requirement (AOCR) in November 2012 which clearly mentions the requirements to get Air Operator Certificate. It has also managed the maintenance of aircrafts by AMT (Aircraft maintenance technician) from UK from this year. It is also planning to build an isolated parking for the planes having bomb threats and hijacking etc next year.&nbsp;</p>
<p style="text-align: justify;">
	No compromise &nbsp;at all with safety could be the best way to lower the high premium in Nepal’s aviation insurance, say the experts. The airline operators, too, are more aware about maintaining the safety standards today than in the past. AOAN has been organizing many seminars on aviation and programmes to help lower the premium by assuring safety. Thapa says, “There have been programmes organized aimed at enhancing the safety measures and we are very much confident that we would be able to enhance the safety measures.” He adds that airline operators are optimistic about reducing the risks. “A plane using only the Visual Flight Regulation (VFR) should not be allowed to go through the clouds. Pilots too should stop flying in pressure. If we follow all the safety measures definitely the risks have to go down. Civil Aviation Authority of Nepal (CAAN) should monitor these flights and instruct the airlines accordingly,” He says.&nbsp;</p>
<p style="text-align: justify;">
	Experts also feel the need of &nbsp;terrain awareness and warning systems (TAWS) developed by manufacturers and safety regulators to prevent accidents from Controlled Flight into Terrain (CFIT). CFIT is among the leading causes of airplane accidents involving the loss of life worldwide. The Wikipedia describes it as an accident in which an airworthy (fit to fly) aircraft, under pilot control, is unintentionally flown into the ground, a mountain, water, or an obstacle. With improvements in infrastructure, training and operations, reinsurers are also optimistic in reducing the cost of insurance to a reasonable level. Horne from Airclams says, “The prospects for aviation insurance business in Nepal are bright. There is a capable and knowledgeable local market which has good relationships with the global insurance community.” He adds, “What is perceived as the current high cost of insurance can and should be reduced for operators who demonstrate a good safety culture and record, adopt a Safety Management Programme that is working well and can prove that it is making a difference.”</p>
<p style="text-align: justify;">
	While the formation of a pool of all the insurance companies to collectively handle the claims in aviation insurance is in the initial phase, the government is planning to convert the insurance pool into a reinsurance company under Beema Samiti. &nbsp;Ramesh Lamsal, Executive Director of Insurance Pool says, “We have not prepared the business plan about aviation insurance yet. But if the aviation segment is included it will support the aviation business in Nepal.” Government authorities say that if the main players in the aviation business in Nepal- the airliners and insurance companies prepare appropriate strategy for the safety measures they are ready to co-operate insurance companies and protect them from those risks. Dr. KC says, “There should be positive attitude towards the formation of possible reinsurance company in Nepal after calculating the advantages and disadvantages on the business. The foremost thing is that it should be for the stability of the aviation business.”</p>',
			'published' => true,
			'created' => '2013-03-16',
			'modified' => '2013-03-22',
			'keywords' => '',
			'description' => 'The insurance companies providing aviation insurance have to pay a high amount of premium – more than 99 per cent at times - to the reinsurance companies abroad. In fact, the companies are sustaining their aviation insurance business from the commission they get for the premiums paid to the foreign reinsurers.',
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	(int) 12 => array(
		'Article' => array(
			'id' => '873',
			'article_category_id' => '40',
			'title' => 'Nepali Insurance Companies Are Paying Big Premium To Re-insurance Companies',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘Nepali insurance companies are paying big premium to re-insurance companies’</strong></p>
<p>
	<img align="right" alt="Fatta Bahadur KC, Chairman Beema Samiti" height="329" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/fatta_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></p>
<address style="text-align: right;">
	<strong>Prof Dr Fatta Bahadur KC</strong></address>
<address style="text-align: right;">
	<strong>Chairman</strong></address>
<address style="text-align: right;">
	<strong>Beema Samiti (The Nepali regulator of Insurance Sector)</strong></address>
<p>
	 </p>
<p>
	 </p>
<p style="text-align: justify;">
	<strong>What is the size of the aviation insurance market in Nepal?</strong></p>
<p style="text-align: justify;">
	Aviation insurance is one of the important portfolios in the insurance sector. So far as the size of the aviation insurance is concerned, it has been increasing every year. There are altogether 17 non-life insurance companies registered. But only seven of them are into the aviation insurance business. The annual premium collection from aviation insurance in Nepal is about Rs 3 billion.&nbsp;</p>
<p style="text-align: justify;">
	<strong>It is said that some insurance companies are trying to form a pool to handle the aviation insurance claims collectively. What is the latest progress in this regard?</strong></p>
<p style="text-align: justify;">
	I, too, have heard that some insurance companies are trying to tie &nbsp;up to form such a pool. But this is yet to get a concrete shape, as far as I know. I think the main objective behind forming such a pool is to reduce insurance risks in the aviation sector. We hope the pool will come into operation in the near future.&nbsp;</p>
<p style="text-align: justify;">
	<strong>What future do you see for the aviation insurance business in Nepal?</strong></p>
<p style="text-align: justify;">
	The future of aviation insurance business is bright. As the government has already adopted a liberal economic policy, many new airliners have entered Nepal. Aviation insurance as a business has grown in Nepal with the growth in the domestic aviation sector. &nbsp;Air travel has become convenient and affordable for many Nepalis today. This has ultimately helped the aviation insurance business grow in the country.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Almost whatever the insurance companies earn from the aviation segment goes to the reinsurance companies abroad. Some are even said to be making losses in the aviation segment. It is said that the companies know that they are not going to make profits from the aviation segment. But they do aviation insurance just to show high amount of premium collections. What do you say?</strong></p>
<p style="text-align: justify;">
	It is obvious. Though, insurance companies should have retention capacities to bear the risks by themselves, most of them lack this. This is one of the reasons why they transfer their risks to the re-insurance companies. Consequently, Nepali insurance companies have to pay a high volume of premium to them. The margin between the premium collected from the airlines companies and the premium paid to the re-insurers is very small. It shows that they are not able to save even the cost to transfer their risks. They need to transfer funds to reinsurance companies. It is a very serious problem.&nbsp;</p>
<p style="text-align: justify;">
	<strong>How can we lower the high insurance premium?</strong></p>
<p style="text-align: justify;">
	First of all, the airlines should try to be safe from different risks. Other stakeholders like CAAN should also maintain the runways properly and other technical aspects, information dissemination practices etc. The pilots, too, should be well-trained. All other stakeholders in the aviation sector should take this matter seriously, work on it together and make careful collective efforts to avoid risks.</p>
<p style="text-align: justify;">
	<strong>Aviation insurance premium in Nepal is said to be among the highest in the world? Why is it so high?</strong></p>
<p style="text-align: justify;">
	Yes it is true. Since the premium is always determined by risks; a high risk ultimately draws a higher premium. This risk is mainly associated with aircraft accidents; the more the accident, the more the risks. We have been trying to reduce the risks in this sector which is known as mitigation of the risks.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The annual claims payout in the aviation sector has been constantly rising. Some people say this could further increase the already significantly high aviation insurance premium. How are we going to address this problem?</strong></p>
<p style="text-align: justify;">
	It is a compulsion for the aviation insurance business in Nepal. Generally, if the premium is high, the practice of insurance is low but in aviation insurance, if the premium is high you need to reinsure with other big companies because of the risk factor. You need to find reliable reinsurers, pay premium and transfer your risks to them. There is a direct and positive relation between the increasing rate of premium and the business of aviation insurance. However, if all these measures are properly adopted then the premium rate will be low.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There are various types of aviation insurance policies in the world. Are all of them available in Nepal?</strong></p>
<p style="text-align: justify;">
	We have only few aviation policies which basically cover the aircraft, crew-members and passengers. It also covers the sky, and if both the parties agree, grounded risks are also included in the aviation insurance. Generally, an insurance policy depends on the requirement of the policy holder. Therefore, the requirements of the airliners play a key role in the agreement between the insurance companies and the airliners.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. How helpful was this summit?</strong></p>
<p style="text-align: justify;">
	The summit was a milestone in Nepal’s aviation sector. It’s &nbsp;definitely a positive development. It helped the stakeholders in the aviation business to know each other and, at the same time, provided a platform to share their experiences, views and problems. I think the re-insurers, the under-writers and other stakeholders who participated in the programme knew the actual situation of Nepal and the aviation insurance business here. The summit was successful and the Nepali stakeholders have succeeded in addressing some of the key issue of the aviation insurance business in Nepal.</p>',
			'published' => true,
			'created' => '2013-03-16',
			'modified' => '2013-03-16',
			'keywords' => '',
			'description' => 'The margin between the premium collected from the airlines companies and the premium paid to the re-insurers is very small. It shows that they are not able to save even the cost to transfer their risks.',
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	(int) 13 => array(
		'Article' => array(
			'id' => '872',
			'article_category_id' => '40',
			'title' => 'The Pooling Mechanism Is To Stabilize The Insurance Market',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘The pooling mechanism is to stabilize the insurance market’</strong></p>
<p>
	<strong><img align="right" alt="Mahendra Shrestha, Himalayan General Insurance" height="301" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/mahendra_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></strong></p>
<address style="text-align: right;">
	<strong>Mahendra Shrestha</strong></address>
<address style="text-align: right;">
	<strong>Managing Director</strong></address>
<address style="text-align: right;">
	<strong>Himalayan General Insurance</strong></address>
<p style="text-align: justify;">
	 </p>
<p style="text-align: justify;">
	<strong>What is your company’s stake in the aviation insurance market?</strong></p>
<p style="text-align: justify;">
	Himalayan General has been writing aviation insurance since 1998 and it is a portfolio we continue to be interested in.</p>
<p style="text-align: justify;">
	<strong>It is said that some insurance companies are trying to form a pool to collectively handle the aviation insurance claims. What is the latest progress in this regard?</strong></p>
<p style="text-align: justify;">
	Preliminary discussions have been initiated for the formation of aviation insurance pool. The formation of such a pool will not only allow insurance companies to gain capacity but also make it viable for the re-insurers to continue supporting Nepal’s aviation insurance market.</p>
<p style="text-align: justify;">
	<strong>What future do you see for the aviation insurance business in Nepal?</strong></p>
<p style="text-align: justify;">
	It is a portfolio which is an absolute necessity in Nepal and one that will continue to grow.</p>
<p style="text-align: justify;">
	<strong>Aviation insurance premium in Nepal is said to be one among the highest in the world? Why is it so high? How can we lower it?</strong></p>
<p style="text-align: justify;">
	Aviation insurance premium in Nepal is certainly very high. Some big losses in the last few years have pushed up the premium rates substantially. The continually rising premium rates are, of course, a serious concern because they impact the sustainability of the business. The pooling mechanism is one of the possibilities we are exploring in order to stabilize the market. Eventually, if the total premium paid is more than the total amount claimed in losses, we hope the premium will start to come down.</p>
<p style="text-align: justify;">
	What are the key challenges and issues facing the aviation insurance industry in Nepal and what needs to be done to address these challenges?</p>
<p style="text-align: justify;">
	Rising premium rates and shrinking market capacity are two major challenges the aviation insurance industry is currently facing. The Aviation Insurance Summit was one way to address these challenges and find a common direction for improvement and growth.</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. How helpful was this summit?</strong></p>
<p style="text-align: justify;">
	The Summit brought local stakeholders, including operators, regulatory bodies, insurance companies and banks as well as key players in the regional and global aviation insurance industry (including underwriters and re-insurance brokers) under one roof. It gave the Nepali stakeholders a global perspective on our current situation as well as access to the expertise of visiting delegates, all of whom have extensive experience in this sector, including in other countries with contexts similar to Nepal.</p>
<p style="text-align: justify;">
	All the delegates who attended the Summit said that they had found it to be a helpful introduction to the Nepal aviation insurance market, adding that it will help them take better decisions for supporting it.</p>',
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			'description' => 'The continually rising premium rate is a serious concern because they impact the sustainability of the business. The pooling mechanism is one of the possibilities we are exploring in order to stabilize the market.',
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	(int) 14 => array(
		'Article' => array(
			'id' => '871',
			'article_category_id' => '40',
			'title' => 'We Are More Aware About  The Safety Concerns Today Than In The Past',
			'sub_title' => '',
			'summary' => null,
			'content' => '<p>
	<strong style="color: rgb(35, 200, 250); font-size: 16px; text-align: right;">‘We are more aware about the safety concerns today than in the past’</strong></p>
<p>
	<img align="right" alt="Rameshwor Thapa, Airlines Operators Association of Nepal " height="314" src="http://www.newbusinessage.com/ckfinder/userfiles/Images/rameshwor_cover_feb2013.jpg" style="margin:0 0 0 10px;" width="250" /></p>
<address style="text-align: right;">
	<br />
	<strong>Rameshwor Thapa</strong></address>
<address style="text-align: right;">
	<strong>President&nbsp;</strong></address>
<address style="text-align: right;">
	<strong>Airlines Operators Association of Nepal (AOAN)</strong></address>
<p>
	<strong><br />
	</strong></p>
<p style="text-align: justify;">
	<strong>What is the size of the aviation insurance market in Nepal?</strong></p>
<p style="text-align: justify;">
	When talking about the insurance size, the Nepali aviation insurance business is small in global comparison. However, it has an addressable size in the context of the South Asian countries. That means the aviation insurance market in Nepal is neither big nor small but of medium size in terms of money as well as the number of insurers involved in this business. We now pay USD 8 to 9 million in premium to international companies annually.&nbsp;</p>
<p style="text-align: justify;">
	<strong>Why is the aviation insurance premium so high in Nepal? How can we lower it?</strong></p>
<p style="text-align: justify;">
	The re-occurrence of air crashes have contributed to the increment of aviation insurance premium. The open sky aviation policy has helped the mushrooming of airliners in Nepal while the infrastructure remains almost the same. And there may be many issues concerning safety issues. The dramatic increase in premium is also because of the climate and weather. Importantly, trunk route operators have fewer problems in comparison to the STOL (short takeoff and landing) route operators mainly because of the high hills and high altitude. In STOL, mainly in helicopters, there are many instances of accidents beyond what could be conconsidered as normal. &nbsp;</p>
<p style="text-align: justify;">
	Now there are more airports and other facilities which could be rated higher in safety. We are organizing many safety seminars and programmes to lower the premiums with the safety much assured. There have been programmes enhancing the safety measures and we are very much confident that we would be able to enhance safety measures. We are more aware about the safety concerns today than in the past. The audit reports by ICAO and other organizations have diversified it further and made it clear also. Aircraft and passenger safety should be the airliners’ main concern. If we maintain all this - for enhanced safety in the aviation sector - definitely the premium will come down.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There have been more than 50 major accidents in the past 10 years. Why is the frequency of aerial accidents so high in Nepal?&nbsp;</strong></p>
<p style="text-align: justify;">
	It is very sad and bitter fact. The increasing premium in aviation insurance is making it difficult for the airline companies. These days we are trying to improve the security in the aviation sector and are not expecting such accidents again. We are working to reduce such accidents by organizing different seminars and programmes to enhance safety in the aviation sector. Through these safety seminars, we are being able to make the stakeholders aware about air safety. There, we make the pilots aware about focusing on safety while the stakeholders update themselves with different issues and activities in the aviation sector. All the people involved in this sector should understand that not compromising any safety measures but maintaining them will help mitigate the risks. Visual Flight Regulation (VFR) should not be allowed to go through the clouds. &nbsp;If we follow all these safety measures, definitely the risks have to go down. Civil Aviation Authority of Nepal (CAAN) should monitor these flights and instruct accordingly.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The annual claims payout in the aviation insurance has been constantly rising. This is bound to further increase the already significantly high aviation insurance premium. How are we going to tackle this problem?</strong></p>
<p style="text-align: justify;">
	We are concerned about this problem. Basically, if we are able to enhance safety measures, it would help to lower the premium paid out to reinsurance companies. Most of the re-insurers are quite convinced that we would be able to maintain safety properly. End of the Maoist war has also spread positive message to the reinsurers. In the past, we had to pay US$ 60 million premium in third party liability though we owned small aircraft. After knowing the problem, Nepal government addressed this. And now we have to pay some 10 million dollars for the same. The thing is, once we fix the safety problem, the premium will come down.&nbsp;</p>
<p style="text-align: justify;">
	<strong>There are various types of aviation insurance policies in the world. Are all of them available in Nepal?</strong></p>
<p style="text-align: justify;">
	There are not various types of insurance policies in the aviation insurance. The available insurances are air-craft’s insurance, passenger’s insurance, cargo insurance, crew-members insurance- including others. There are insurance policies with same periphery and nature and are normally practiced in other countries as well. Now there are different types of reinsurance market but the problem is they take our situation as an alarming one. I think the situation is not that alarming. Some of the reinsurance companies really want to work and support the Nepali aviation sector which includes Indian as well as western reinsurance companies. A new aviation group in Malaysia is also interested in this business. Moreover the re-insurer companies are not of various types; they are of a singular nature and type.&nbsp;</p>
<p style="text-align: justify;">
	<strong>The country’s first-ever aviation insurance summit was organized in the capital recently. What’s your impression of the summit?&nbsp;</strong></p>
<p style="text-align: justify;">
	It was definitely helpful to us. I think the reinsurance companies that were finding threats in our sky are convinced that the premium which we are paying is not justifiable. We hope that in the coming days they won’t increase the premiums and won’t take our sky as an alarming one for aviation insurance. They got a chance to understand our aviation environment and we had a chance to put the reality in front of them. We were able to prove that there is neither any violence in the country nor any threat in the aviation sector. We were able to prove that we are quite committed to maintaining safety and that we are continuously working on it. We have learnt from past accidents and we are committed to avoiding such accidents.&nbsp;</p>',
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Currency	Unit	Buy	Sell
U.S. Dollar	1	121.23	121.83
European Euro	1	131.65	132.31
UK Pound Sterling	1	142.47	143.18
Swiss Franc	1	124.29	124.90
Australian Dollar	1	71.69	72.05
Canadian Dollar	1	83.90	84.32
Japanese Yen	10	10.94	11.00
Chinese Yuan	1	17.17	17.26
Saudi Arabian Riyal	1	32.27	32.43
UAE Dirham	1	33.01	33.17
Malaysian Ringgit	1	27.36	27.50
South Korean Won	100	9.77	9.82

Update: 2020-03-25 | Source: Nepal Rastra Bank (NRB)

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Fine Gold	1 tola	77000.00
Tejabi Gold	1 tola	76700.00
Silver	1 tola	720.00

Update : 2020-03-25

Source: Federation of Nepal Gold and Silver Dealers' Association

Petroleum

Petrol	1 Liter	106.00
Diesel	1 Liter	95.00
Kerosene	1 Liter	95.00
LP Gas	1 Cylinder	1375.00