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Date: 7th June, 2009

Highlights

• The Tarai Madhes Democratic Party, the fifth largest party in the Constituent

Assembly, on Saturday decided to join the CPN-UML-led government.

• Upendra Yadav-led faction of the Madhesi Janaadhikar Forum on

Saturday sent a message to parliamentary party leader and Deputy Prime

Minister Bijaya Kumar Gachhadar stating that the party might withdraw its

decision to expel the seven leaders if Gachchhadar resigned from his post

• CPN-UML president Jhala Nath Khanal on Saturday directed his party cadres

to retaliate if anyone attacks them

• Madhesi Janaadhikar Forum led by Upendra Yadav on Saturday organised a

protest rally in the capital against, what it said, the ‘unconstitutional, immoral

and anti democratic’ move of Prime Minister Madhav Kumar Nepal to appoint

its parliamentary party leader Bijay Kumar Gachhadar as deputy prime

minister without taking the party’s consent.

• The Constituent Assembly Committee to Protect National Interests (CPNI)

today incorporated inputs from the CA members offered during discussions on

its concept paper.

• As the internal debate between the so-called hardliners and the party

establishment in the Unified Communist Party of Nepal (Maoist) grows

sharper

• Chairman of National Human Rights Commission (NHRC) Kedar Nath

Upadhyay said impunity is still rearing its ugly head in the country as political

parties are shielding criminals.

• An alleged Lashkar-e-Taiba operative held on Thursday ran a logistical hub

that funnelled dozens of jihadists through Nepal to targets across in India,

Delhi Police sources have told Hindu The

• Nepal on Friday dismissed reports of encroachment by the Indian Army in the

border district of Dang region, saying as per preliminary findings the

government has not found any evidence in this regard

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• The World Bank on Thursday agreed on a new two-year lending strategy for

Nepal potentially worth $782 million

• Vindicating New Delhi's stand, the Nepalese government has dismissed

allegation by Maoists that Indian security forces had encroached the border

districts of Dang and Bara, saying it had found no evidence in this regard

• The Australian Agency for International Development (AusAID) and the

United Nations Development Program (UNDP) have signed a 4.5 million

Australian dollar (some 3.6 million U.S. dollars) cost sharing agreement to

continue support for the MicroEnterprise Development Program (MEDEP) in

Nepal

• Bank of Kathmandu (BoK) has appointed audit firm B.K. Agrawal and

Company to carry out its due diligence audit (DDA), among four bidders

• Share holders of the troubled-Nepal Development Bank (NDB) are moving

Commission for Investigation of Abuse of Authority (CIAA) against NDB

board and the central bank

• An increasing number of internal tourists are visiting the historic

Sindhulimadhi area in Sindhuli district. Construction of the road leading to the

area that remained disconnected until recently is the cause of spurt in tourist

arrival

• Yeti Airlines is all set to expand its network by launching flights to remote

places that are unattended by many airline companies

• Over the first five months of 2009, Nepal´s readymade garment exports to the

United Stated dropped to half the usual volume, as manufacturers shied away

from accepting new orders of lower value that came their way

• The shareholders of the development banks sub-group gained this week

defying the market fundamental

BANKING / ECONOMY:

Auditing of BoK financial status begins

Bank of Kathmandu (BoK) has appointed audit firm B.K. Agrawal and Company to

carry out its due diligence audit (DDA), among four bidders.

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The board meeting of the BoK held last Wednesday decided to award B. K. Agrawal

the DDA contract under which the latest financial status of the bank is reviewed.

Other competing firms were R Bajracharya and Company, G.B and Company and

Baker Tilly, Baskota and Company.

After the Nepal Rastra Bank (NRB) took over the bank for three months on May 19

saying that the squabble between the two groups of promoters posed a threat to

depositors' interest, the NRB headed board decided to do auditing.

"We need to know about the actual status of the bank at present before holding special

annual general meeting (AGM) which will elect a new board," said Laxmi Prasad

Niraula, director of the NRB who has been assigned to head the BoK board.

The auditing firm will have to complete the DDA process within 15 days, according

to BoK. The bank will hold the AGM after the auditing report is presented to the

board. The NRB has however kept open the option of handing over the original BoK

management earlier board if the squabbling groups settle their differences and ask the

central bank to leave.

The central bank has barred all seven bank's board members including Sanjaya Shah

and Radhesh Pant from becoming directors of any financial institution for five years.

The Shah group has however filed a case against the NRB for taking control of the

bank over the issue of squabbling triggered by the firing of Pant from the post of

managing director on March. The group maintains that the case is strictly 'internal

issue' of the bank.

The central bank has however made it clear that it has the right to take action against

any financial institution to safeguard depositors' interest.

The BoK has the deposits of Rs. 17.61 billion in its total financial resources of Rs.

20.32 billion. The promoters' contribution to the bank's financial resources stands at

just Rs. 840 million.

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"The central bank however had not taken over the BoK due to its bad financial health

but to warn the bank promoters quarrelling against each other risking the deposits of

ordinary people," said an NRB official.

As per the third quarterly report of the bank's financial status, is operating profit

stands at Rs. 514 million and its non-performing loans stands at just 1.7 percent

Source: The Kathmandu Post

Date: 06/07/2009

Shareholders of NDB to move CIAA

Share holders of the troubled-Nepal Development Bank (NDB) are moving

Commission for Investigation of Abuse of Authority (CIAA) against NDB board and

the central bank.

“We are cheated by NDB board and the NRB both,” said shareholders, who are

preparing to file a case at the anti-corruption body. “They should be jailed — for

cheating depositors and share-holders — and forced to pay from their property,” he

added.

On Tuesday, Nepal Rastra Bank (NRB) has decided to send the ailing financial

institution into liquidation. The NRB has claimed that it tried hard to improve and

revive the first development bank of the country for five long years but failed.

Some of the NDB staff are also consulting the lawers to move the CIAA against the

bank’s management. “We are meeting the bank’s chairman Amar Gurung on

Sunday,” a staff at the bank said adding that they would decide after the meeting.

The 70 per cent share of the NDB is owned by the promoters — like NRB, Beema

Sansthan and many more — while remaining 30 per cent shares are with public.

The central bank has seized the NDB’s cash and securities from its head office at the

Heritage Plaza and Pokhara office — after freezing all the transactions. The NRB has

sought clarification from the NDB on why shouldn´t it be liquidated. After 15 days —

on June 17 — if the answer of the bank is not satisfactory, the central bank will move

the Patan Appellate Court asking permission to appoint liquadator.

The bank has a total deposit of Rs 720 million as at mid-March 2009. The institutional

depositors like Employment Provident Fund and Nepal Army are going to lose their

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deposits. They had Rs 330 million and Rs 200 million deposits respectively as the

fixed term deposits. But the NDB could not return Nepal Army’s deposit even after

the term matured.

“The Nepal Army’s deposit is under call deposit,” the source said adding that after

expiring the term the status of the deposit has been changed. Despite repeated

directives by the central bank to improve financial health, the NDB didnot pay

attention rather moved the Patan Appellate Court twice and got ex-parte stay order

overturning NRB’s decision. The NRB has declared it ‘a problematic bank’ in 2007

and directed to reduce its negative capital fund, appoint professional CEO and

improve internal governance. It has an accumulated loss of Rs 678.6 million by the

end of mid-March

Source: The Himalayan Times

Date: 06/07/2009

Road boosts tourism

An increasing number of internal tourists are visiting the historic Sindhulimadhi area

in Sindhuli district. Construction of the road leading to the area that remained

disconnected until recently is the cause of spurt in tourist arrival.

There had been efforts years ago to construct a road link to the historic fort with the

district headquarters. But this time around local residents and the District

Development Committee took up the road project from Solabhanjyang to Gadhi area

(around three kilometers gravel road) and made their dream come true. With the road

coming into operation, people from several parts of the country have been flocking to

this historically significant place.

“One can travel by vehicle without any hindrance to the Gadhi area,” said Rajan

Prasad Adhikari, treasurer of road construction committee.

According to Adhikari, the number of Nepali tourists visiting the area is on the rise.

He also said that renovation of some historic infrastructures is underway. On the other

hand, locals are happy to welcome tourists, as the rising number of visitors has

opened new prospectus of making a living for some of them

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Source: The Himalayan Times

Date: 06/07/2009

Yeti Airlines to fly to 4 more remote places

Yeti Airlines is all set to expand its network by launching flights to remote places that

are unattended by many airline companies. To begin with, the airlines will soon start

chartered flights to Langtang, Jiri, Dhorpatan and Syangboche.

Many airline companies in the country had not been able to conduct flights to

majority of the far-flung areas after the government banned usage of single-engine

aircraft citing safety reasons. Single-engine aircraft, which have short take-off and

landing capability, are vital for airlines serving small airfields located in high

altitudes.

However, after conducting a study on safety records and acknowledging the

importance of such aircraft for a hilly and mountainous country like Nepal, the

government has started granting license to operate chartered flights on single-engine

aircraft some five months ago.

Taking advantage of the revised provision, Yeti Airlines has recently brought a

Pilatus Porter, a Swiss-made single-engine aircraft with capacity to seat nine

passengers and two crew members. This aircraft is known as one of the most reliable

single-engine aircraft currently in operation worldwide.

Initially, Yeti Airlines will use its Pilatus Porter only to ferry passengers to four

remote places – Langtang, Jiri, Dhorpatan and Syangboche. The airlines plans to fly

to around 10 other far-flung places with small airfields soon after purchasing two

more of Pilatus Porters in near future.

“We believe launching flights to places that have not been served by many will

further consolidate our market position,” Vijay Shrestha, executive director of Yeti

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Airlines, told myrepublica.com.

Pilatus Porter was first used in Nepal in May 1960 to ferry transportation and

climbing equipment of Swiss Dhaulagiri Himalaya Expedition. Nepal Airlines

Corporation, the state-owned airline company, also used three Pilatus Porters from

1961 to 1998.

Source: www.myrepublica.com

Date: 06/07/2009

TRADE / FINANCE:

Garment exports drop to half

Over the first five months of 2009, Nepal´s readymade garment exports to the United

Stated dropped to half the usual volume, as manufacturers shied away from accepting

new orders of lower value that came their way.

Exporters say that the leading US importers offered 15 percent lower prices for fresh

orders amid the drop in consumer spending in the United States, the largest apparel

market. “The rates were so low, we wouldn´t have fetched any return; that´s why we

could not accept all the orders,” said an official at Garment Association Nepal (GAN).

GAN´s statistics show that garment exports amounted to a mere US$ 3.40 million

during the first five months of 2009; in the same period last year, the figure stood at

US$ 6.91 million. In fact, the volume exported this year did not even total one-tenth

of what the country exported in the same period in 2004.

Moreover, statistics show that garment exports dipped to 49 percent in May alone.

Exports during the month were valued at just over half a million dollars; in May 2004,

that figure was US $8.33 million.

Little wonder then that exporters say the industry has cratered over the last five years,

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in the absence of political and government support and in an environment that´s rife

with labor problems.

The gloom in the garment industry, once the largest foreign currency spinner, had first

crept in in 2002, when the United States started providing duty free facility to Sub-

Saharan and Caribbean countries. That provision instantly made Nepali exports more

expensive than their competitors´ by some 17 percent.

Since that year, the garment-export business has gotten progressively worse: within

the country, labor problems, the lack of cost-effective infrastructural and logistics

support and strike and bandas have hobbled the sector; and without, factors like the

elimination of quotas in global apparel trading, have served to weaken Nepal´s

garment sector.

During this ultra lean period, the number of industries has dropped to about a dozen

from the more than 250 of the past. And in a vicious cycle, employment numbers

have also declined with dwindling investments.

To resuscitate the industry, GAN has made clear that three measures must be taken: i)

a Garment Processing Zone, the operating of which should lower productions costs,

must be set up (the idea has been pushed since 1999); ii) an order-based hiring system

(sought since 2007) that frees manufacturers from undue labor liability must be

instituted; and iii) a duty-free-entry facility for Nepali garments in the United States

(an issue that´s been lobbied for since 2005) must be provided by the United States.

Given the political instability and the weak government in the country, entrepreneurs

doubt that the first two measures can be fulfilled. They are, however, hopeful that

something similar to their third prescription might see the light of day, especially now

that a couple of US senators have recently re-registered a bill that promises duty-free

market access for some dozen Least Developed Countries, including Nepal.

Source: www.myrepublica.com

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Date: 06/07/2009

MARKET:

Nespe defies market basics

The shareholders of the development banks sub-group gained this week defying the

market fundamental. The development banks sub-group — despite the central bank’s

decision to send Nepal Development Bank (NDB) to liquidation — flared by 12.34

points to close at 769.25 points.

Contrary to the surge in the development banks sub-group’s index, the market pundits

were predicting the drop in the development bank’s index after the bold decision of

the central bank. The development banks and hotels sub-groups are the only two sub-

groups — out of nine sub-groups — that witnessed growth this week. The hotels sub-

group surged by 1.45 points to close at 366.45 points.

However, the Nepse plunged below 700 points as other seven sub-groups indices

dropped pulling the Nespe down by 19.74 points to close at 698.88 points from last

week’s closing of 718.62 points. The plunge in Nepse justified the ‘unnatural growth’

a week ago.

Two sub-groups — trading and manufacturing — indices remained unchanged at

281.78 points and 434.32 points as Nepse didnot see any transactions of their shares

this week.

The sole secondary market might still not see any encouraging growth in a couple

of weeks as two new primary issues worth Rs 495.6 million — much awaited

Chilime Hydropower (worth Rs 230.4 million) and Vibor Bikas Bank (worth Rs

265.2 million) — are in pipeline.

The market this week gained on only one day — out of the five day trading — on

Tuesday. The other four days, Nepse lost as the present uncertainty is making the

investors nervous and they are looking for exit.

The transaction amount this week has also gone down by 5.56 per cent to Rs 345.18

million as against the last week’s fall of 13.12 per cent to Rs 278.4 million. The

contribution of Group-A companies also went down by 49.01 per cent as against last

week’s 67.78 per cent.

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The shareholders of others, commercial banks, hydropower companies, insurance

companies, and finance companies sub-groups lost. The others sub-group lost a

whopping 41.11 points to 675.56 points and commercial banks sub-group followed

with a loss of 19.44 points to 717.11 points. Similarly, hydropower companies’ sub-

group plunged by 17.27 points to 861.39 points and insurance companies sub-group

shed 6.43 points to 644.35 points.

The finance companies sub-group witnessed a marginal loss of 0.62 point as it closed

at 761.25 points.The 78-scrip sensitive index — considered the blue chip shares in the

domestic market — also lost 3.67 points to 190.31. The float index — calculated on

the basis of real transactions — shed 1.50 points to close at 67.15 points.This week

NCC Bank (with Rs 40.75 million) topped the chart in terms trading amount followed

by Standard Chartered Bank Nepal (with Rs 36.49 million), Prabhu Finance (with Rs

36.45 million), Paschimanchal Bikas Bank (with Rs 27.44 million) and Bank of

Kathmandu (with Rs 19.21 million).

Similarly, in terms of share units traded NCC Bank topped the chart as its 1,35,000-

unit of shares changed hands. But in terms of number of transactions, Prabhu

Finance topped the chart with 2274 transactions. The sole secondary market this

week also listed 10 million-unit of shares each of — Bank of Asia Nepal and Citizens

Bank International — that would see their transaction after seven days.

Source: The Himalayan Times

Date: 06/07/2009

POLITICS / POLICIES:

4 more parties to join coalition

The Tarai Madhes Democratic Party, the fifth largest party in the Constituent

Assembly, on Saturday decided to join the CPN-UML-led government. Earlier, the

party had decided to support the formation of the coalition government.

The central working committee meeting of the party, held here today, formally took

the decision. However, the party has not finalised the list of leaders to join the

government. The party also formed a four-member panel led by Hridayesh Tripathi to

hold talks with other coalition partners to dwell on sharing power. Mahendra Prasad

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Yadav, Ram Kumar Sharma and Jitendra Sonal are the other members in the panel.

Speaking to this daily, joint general secretary Sonal said the party had decided to join

the government to raise the Madhes issues. Sonal also said the party would stake

claim on more than three portfolios in the cabinet. The UML has pledged two

ministries for the party.

Sonal, however, made it clear that their main priorities were the peace process,

constitution-drafting process and hosts of other issues of concern to Madhes, and not

the allocation of ministries.

The Sadbhavana Party, meanwhile, has demanded two ministries for the party.

Laxman Lal Karna, senior leader of the party, said the UML had proposed a ministry

for the party. “Our president Rajendra Mahato will lead the party in the government,”

he added.

The Rastriya Prajatantra Party has decided to join the new government today. The

UML has proposed a ministry for the party. RPP’s central committee member Deepak

Bohora said the party had authorised chairman Pashupati SJB Rana to pick the name.

However, Rastriya Janashakti Party is still undecided about joining the government.

RJP co-chairperon Dr Prakash Chandra Lohani said the party was yet to discuss on

the issue. Dr Lohani also said the UML had not asked his party to join the

government.

On the other hand, Chure Bhavar National Unity Party, is likely to join the

government. “Some parties are urging me to join the government but I am focussed

on our party’s agenda rather than joining the cabinet,” party president Keshav Mainali

said, addressing a programme on Saturday

Source: The Himalayan Times

Date: 06/07/2009

Yadav may rethink if DPM quits

Upendra Yadav-led faction of the Madhesi Janaadhikar Forum on Saturday sent a

message to parliamentary party leader and Deputy Prime Minister Bijaya Kumar

Gachhadar stating that the party might withdraw its decision to expel the seven

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leaders if Gachchhadar resigned from his post.

According to MJF lawmaker Rajkishwor Yadav, the seven MJF lawmakers close to

Gachhadar today met party president Yadav, urging him to withdraw the decision to

expel the leaders from the party. He claimed that while the Gachhadar faction was

trying to save the party from an imminent split, it refused to accept any preconditions.

Both the factions were engaged in internal discussions to sketch a future strategy on

Saturday. While the PP leader Gachhadar has been claiming support of more than 33

lawmakers, Yadav has claimed that he has the support of 28 lawmakers.

Meanwhile, Prime Minister Madhav Kumar Nepal this evening met Gachhadar to

discuss the latest developments within the party. Some MJF leaders are learnt to have

advised the top leaders to adopt a middle path to save the party from possible split.

“We are looking for a middle path to settle the dispute. The central committee

meeting might be called so that we may reach a decision favourable to both the

factions,” central committee member Dr Tilak Rawal told The Himalayan Times

Source: The Himalayan Times

Date: 06/07/2009

UML prez calls cadres to hit back

CPN-UML president Jhala Nath Khanal on Saturday directed his party cadres to

retaliate if anyone attacks them.

Speaking at a party meeting held at district headquarters Manthali today, Khanal

slammed the Unified CPN-Maoist for showing anti-leftist tendencies by attacking

people holding different views. “If somebody tries to attack you, don’t remain silent.

Retaliate against them,” he directed his party cadres.

The district chapter of the UML organised the meet to protest the UCPN-M’s attack

against its general secretary Ishwor Pokharel on May 17.

Khanal also asked party cadres to prepare a list of people who issue threats to them.

The UML boss said the UCPN-M would pay heavily for its excesses and added that

the Prachanda-led government was toppled because of its anarchic activities.

Khanal accused the Maoists of fascism and harbouring criminals.

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Khanal said the UML-led government would go ahead as per the spirit of consensus

with other political parties. “The government would specially prioritise the integration

of armies, draft the constitution within the stipulated deadline and trigger economic

revolution in the country,” he added.

Saying that the UML is ready to sacrifice for the protection of motherland, Khanal

said his party would move ahead as per the spirit of unity. He clarified that the Youth

Force, the party’s youth wing, was formed for the protection of Nepali people. Khanal

also directed the YF cadres not to take law in their hands.

Prime Minister Madhav Kumar Nepal, on the other hand, said today that the

government would move ahead by joining hands with all political parties to take the

peace process to a logical conclusion.

“This is not the time to aggravate disputes,” Nepal said, after visiting Martyrs’ Park,

which has been under construction for the last two years in Jagadol VDC in

Kathmandu today. “The park, which will be constructed to honour martyrs of

different movements in the country, will help future generations to know the martyrs

and honour their sacrifice,” he added.

The government decided to construct the park on May 1, 2007, in an area spread over

629 ropanis.

Though the government had prepared a three-year plan to complete the construction,

no progress has been made so far. The government plans to install statutes of all

martyrs announced by the government at different times.

Source: The Himalayan Times

Date: 06/07/2009

MJF protests against PM’s move

Madhesi Janaadhikar Forum led by Upendra Yadav on Saturday organised a protest

rally in the capital against, what it said, the ‘unconstitutional, immoral and anti

democratic’ move of Prime Minister Madhav Kumar Nepal to appoint its

parliamentary party leader Bijay Kumar Gachhadar as deputy prime minister without

taking the party’s consent.

The rally started from the party office in Shankhamul and ended in New Baneshwor

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intersection where the party cadres burnt an effigy of PM Nepal.

“We will organise torch rallies tomorrow in the Tarai to protest the act of the PM and

other bigger parties, which undermined the democratic practice and the Madhesi

movement by appointing Gachhadar as the deputy prime minister,” said MJF leader

Ram Sahaya Prasad Yadav.

He added that they would organise a bandh on Monday in the Tarai areas. Other

protest programmes will be made public later, Yadav added.

The group led by Chairman Upendra Yadav had expelled seven leaders, including

parliamentary party leader Gachhadar yesterday accusing them of indulging in anti-

party activities.

The party was split into two groups yesterday, one led by Yadav and the other by

Gachhadar, following the appointment of Gachhadar as deputy prime minister on

Thursday.

The Yadav group also announced withdrawal of its support to the CPN-UML-led

government on Friday

Source: The Himalayan Times

Date: 06/07/2009

Inputs added in the concept paper

The Constituent Assembly Committee to Protect National Interests (CPNI) today

incorporated inputs from the CA members offered during discussions on its concept

paper.

As per the suggestions, the committee has revised its concept paper and its

preliminary draft. A divergence from the earlier provision on compulsory conscription

in the army, the revised concept paper states, “It shall be the duty of every citizen to

voluntarily take part in the military training and serve the nation as and when

required.”

The lawmakers, including the ones from the NC, the UML and some other parties,

had opposed the idea of compulsory conscription, claiming that such a provision

would encourage militarisation and adversely affect the national economy.

The concept paper has also stressed the need to safeguard the landlocked country’s

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right to access to sea under the UN Convention on the Law of Sea, 1982. Free access

to the sea (transit right, facilities of free transportation and communication), equal

treatment

in the port of transit country and the right to participate in international regime

are the key components of the UN convention on the Law of Sea. The paper

suggested the government to take diplomatic overtures to ensure such rights to

safeguard national interest.

Meanwhile, members of the Committee came down heavily on the newly appointed

Foreign Minister Sujata Koirala for saying that there had been no encroachment of

Nepali territory along the Nepal-India border.

UML’s Rabindra Adhikari, UCPN-M’s Pralhad Lamichhane and NC’s Dip Kumar

Upadhyay and Kamala Pant suggested the government to resolve the issue through

diplomatic means.

They also suggested that the parliamentary team should visit the border area in Dang

and present its report to the Parliament. Home secretary Govinda Kusum has clarified

that India had not encroached on the territory of Nepal.

Addressing the International Relation and Human Rights Committee of the parliament

on Friday, Kusum said that a team from Home Ministry, Department of Survey,

mediapersons and human right activists had inspected the site and found that Nepal’s

territory had not been encroached upon.

“However, there is an urgency to curb crime on the border,” he added. Stating that the

issue was blown out of proportion, he claimed that the pillars on the border had not

been removed as reported in the media.

Likewise, Foreign Minister Sujata Koirala iterated that India had not encroached

Nepal’s territory in Dang district. Talking to mediapersons after meeting Indian

ambassador to Nepal Rakesh Sood in her residence, she said,

“The officials who returned after inspecting the site have reported that India has not

encroached on Nepal’s territory.” Indian ambassador Sood claimed that some

political parties were trying to mar the friendly ties between the two countries by

spreading baseless rumours

Source: The Himalayan Times

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Date: 06/07/2009

Dahal to call for nat'l unity govt

To reiterate commitment to multiparty democracy, peace process

As the internal debate between the so-called hardliners and the party establishment in

the Unified Communist Party of Nepal (Maoist) grows sharper, party Chairman

Puspha Kamal Dhahal is preparing a political document emphasizing national

consensus and the need for a national unity government, and reiterating his party’s

commitment to multiparty democracy.

Chairman Dahal has temporarily moved from his residence in Naya Bazar to a private

residence in Godavari where he has been busy for the last couple of days preparing a

political document to be presented at the party politburo meeting scheduled for June

11.

Some hardliners have pressed for a review of the party’s political direction in the

wake of the recent political debacle. “It has become necessary to review the party’s

political direction since it seems to get us nowhere,” said a leader loyal to the radical

camp in the party.

But a leader close to the party establishment said Chairman Dahal’s political

document will be clearer than ever on the party’s future direction. The chairman’s

document, according to the leader, will unambiguously reiterate the commitment to

multiparty democracy, writing the constitution in time and taking the peace process to

a logical conclusion. “The document will also call for formation of a national unity

government under the leadership of the Maoist party to write the constitution in time

and to hold another general election,” said the leader. The document will stress

correcting the “wrong move” of President Dr Ram Baran Yadav and establishing

civilian supremacy to begin the process of political consensus.

The hardline camp, however, has a different plan: It wants to press for a general

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convention of the party to review the political direction taken so far. The Maoist party

hasn’t held its general convention for the last 18 years, perhaps the longest in the

party’s history. But the party establishment said the party general convention is on the

cards anyway and it was decided on two years ago but deferred due to time

constraints. “The politburo meeting is likely to decide to hold the party general

convention tentatively in about 4-5 months but that’s not because of the growing

demand from them [hardliners],” said the leader close to Chairman Dahal.

He asserted that the party will not turn back from its political direction; instead, it will

take on the so-called hardliners harshly if necessary. “We feel that we should have

done so earlier but then our priority was party unity.” He also argued that part of the

suspicion about the Maoist party’s political commitment was due to the dissenting and

contradictory voices among senior leaders of the party.

The party establishment’s confidence seems to be strong also because of its hold on

the party rank and file, especially among the PLA combatants.

The party establishment was challenged by the hardliners led by senior leader Mohan

Baidya at the national conclave of cadres held in Kharipati last November where

Baidya had called for immediate capture of the state through a people’s revolt.

But he backed down after a majority of the cadres and over 95 percent of PLA

representatives at the conclave supported the party chairman’s proposal for

consolidating the gains of the People’s War and People’s Movement by writing a pro-

people constitution and taking the peace process to a logical conclusion.

Chairman Dahal may also have felt the need to come clean on his commitment to the

democratic process because of the secret videotapes in which he was caught making

inflammatory remarks.

Source: www.myrepublica.com

Date: 06/07/2009

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NHRC chief: Parties shielding criminals

Chairman of National Human Rights Commission (NHRC) Kedar Nath Upadhyay

said impunity is still rearing its ugly head in the country as political parties are

shielding criminals.

Inaugurating the 25 annual general assembly of Group 3, Kathmandu, of Amnesty

International here today, he said cadres mobilised by main political parties are

continuing murder, violence and abduction, deteriorating the human rights condition.

Feeling sorry about the government's act of not considering human rights as the

national agenda, the NHRC chief said human rights situation would not improve till

the tendency of withdrawing the cases of those persons involved in criminal cases by

political parties.

He said human rights activists and different organisations should unite to establish

rule of law and pressurise the authorities concerned. He said those involved in various

criminal activities in eastern Tarai were released just because they had political

affiliation. Upadhyay said government has not forwarded the process of

implementation though the commission has recommended the government for

implementing the International Treaties against Forceful Abduction of People.

At the programme, chairperson of the National Election Monitoring Committee Surya

Prasad Shrestha said political parties should act responsibly to end impunity.

Professor Kapil Shrestha said authorities concerned should create civilised society

guaranteeing human rights.

Human rights activists Charan Prasai, Gopla Krishna Siwakoti and Subodh Raj

Pyakurel also said ending impunity is the country's main challenge.

Source: www.kantipuronline.com

Date: 06/07/2009

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INTERNATIONAL COVERAGE:

Arrested cleric ran Lashkar’s Nepal hub

An alleged Lashkar-e-Taiba operative held on Thursday ran a logistical hub that

funnelled dozens of jihadists through Nepal to targets across in India, Delhi Police

sources have told Hindu The.

Working with fugitive Lashkar commander Mohammad Saifullah, Bihar-born Nepali

national Mohammad Omar Madani provided Lashkar operatives with passports, cash

and communications facilities that allowed them to travel from Pakistan to India

through Kathmandu — and then secure their escape.

Fahim Arshad Ansari, who is now being tried on charges of having generated the

videotape that facilitated the training of the perpetrators of November’s carnage in

Mumbai, is among those alleged to have benefited from the logistical infrastructure

Madani helped set up. Sabahuddin Ahmed, Ansari’s immediate superior and the first

Indian national to have commanded a Lashkar field unit, also used the Lashkar’s

transit hub.

Lured by lucre?

Madani’s journey into the Lashkar, Delhi police sources said, began after he tapped

Nepali Islamists for funds to expand the family-run Shams-ul-Huda seminary at

Kalyanpur, in Nepal’s Saptari district.

Nepal-based Jamaat Ahl-e-Hadis activists Abdul Khaliq and Mohammad Haroun are

alleged to have put Madani in contact with the Markaz Dawat wal’Irshad —the name

used by the Lashkar-e-Taiba’s parent organisation, the Jamaat-ud-Dawa, prior to its

proscription by Pakistan in 2002.

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According to the Delhi police, Madani first attended the Markaz’s annual rally at

Muridke, near Lahore, in 1997. He met with Markaz chief Hafiz Mohammad Saeed

— who was controversially released from house arrest in Pakistan earlier this week —

as well as key military commanders Zaki-ur-Rahman Lakhvi and then in-charge of

operations targeting India, Mohammad Azam Cheema.

Delhi police sources said Madani had visited Pakistan at least twice in recent years

and met Saeed on both occasions. He also spent time in Qatar raising funds for

Islamist causes in Nepal.

Police believe Madani recruited upwards of two dozen residents of the India-Nepal

borderlands to the Lashkar. Among them is Kamal Ahmed Ansari, who is now being

tried for his alleged role in the 2006 bombing of Mumbai’s suburban train system.

Born in Balkatuwa village in Bihar’s Madhubani district, Saudi Arabia-educated

Madani belongs to a locally-renowned clerical family.

His father, Shams-ul-Huda Madani, set the Jamia Islamia madrasa at Janakpur, just

across the border in Nepal, more than two decades ago.

Speaking to journalists in New Delhi, Union Home Minister P Chidambaram

described Madani’s arrest as “a measure of the good intelligence and good

investigative work done by our intelligence agencies and police.”

Source: http://www.hindu.com

Date: 06/07/2009

Nepal says no encroachment by India

Nepal on Friday dismissed reports of encroachment by the Indian Army in the border

district of Dang region, saying as per preliminary findings the government has not

found any evidence in this regard.

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Foreign Minister Sujata Koirala after a meeting with Indian Ambassador to Nepal

Rakesh Sood told reporters that as per preliminary reports the government has not

found any encroachment and harassment by Indian security forces as reported by

media in Dang.

The government has sent a team to investigate the matter and so far as our

information, no such thing has come out, she said.

Mr. Sood said the allegation was totally false and fabricated, some people are

deliberately spreading the rumour to disturb the friendly ties between the two

neighbouring countries.

He asked the Nepalese government to investigate into the matter

Source: http://www.hindu.com

Date: 06/07/2009

World Bank approves $782 mln in lending for Nepal

The World Bank on Thursday agreed on a new two-year lending strategy for Nepal

potentially worth $782 million.

Under the interim strategy, the World Bank's private sector lender could potentially

commit an additional $15 million to $20 million annually during the two-year period.

"The Bank's strategy document supports the promotion of consensus and unity to

address key elements of the peace process, including the foundations for state

building, growth, and improved basic service delivery for Nepal's poor," the World

Bank said in a statement.

The bank said it had prepared an interim strategy because Nepal is in a transitional

period with a new constitution being drafted and elections expected in 2011.

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Nepal swore in moderate Communist Prime Minister Madhav Kumar Nepal, last

month after his Maoist predecessor quit, plunging the nascent republic into a crisis.

Various ethnic groups are now demanding a greater role in running the government,

and some are pressing for separate autonomous states as the Himalayan nation

prepares a new constitution after its 239-year-old monarchy was abolished.

Prime Minister Nepal was sworn in on May 25, but is yet to name his full cabinet due

to wrangling among coalition partners over positions, leaving the country in limbo.

He is expected to face a difficult year with the Himalayan nation beset by crippling

power cuts, poor public security, high inflation, unemployment as well as food

shortages.

Source: http://www.reuters.com

Date: 06/07/2009

Nepal govt says no evidence of encroachment by Indian forces

Vindicating New Delhi's stand, the Nepalese government has dismissed allegation by

Maoists that Indian security forces had encroached the border districts of Dang and

Bara, saying it had found no evidence in this regard.

After a meeting with Indian Ambassador to Nepal Rakesh Sood, Foreign Minister

Sujata Koirala told reporters last night that as per preliminary reports the government

here has not found any encroachment of land and harassment of locals by Indian

security forces.

"The government has sent a team to investigate the matter and so far as per our

information, no such thing has come out," she said.

Her remarks follow Maoists' allegation that Indian security forces had encroached the

border in Dang and Bara districts and shifted the pillars. A section of Nepalese media

had also levelled such allegations against the Indian side.

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Ambassador Sood said the allegations were totally false and fabricated and that some

people were deliberately spreading the rumour to disturb the friendly ties between the

neighbouring countries. He asked the Nepalese government to investigate the matter.

Source: http://www.ptinews.com

Date: 036/07/2009

Australia to support Nepal through UNDP

The Australian Agency for International Development (AusAID) and the United

Nations Development Program (UNDP) have signed a 4.5 million Australian dollar

(some 3.6 million U.S. dollars) cost sharing agreement to continue support for the

MicroEnterprise Development Program (MEDEP) in Nepal.

According to a statement issued by United Nations House in capital Kathmandu on

Friday, the additional resources from AusAID will allow UNDP to support 20,000

more low income families to establish agro-based, forest-based, tourism-based and

service-based micro-enterprises through its MEDEP, Phase III (April 2008 -December

2010).

The program aims to contribute to the Nepali government's efforts to reduce poverty

by creating economic opportunities especially for the poor, unemployed youths,

women and those from socially marginalized groups.

To ensure the sustainability of the program, MEDEP III will also support capacity

building within the local bodies, non-government organizations and private sector.

In the signing ceremony, Susan Grace, the Australian Ambassador to Nepal, said

"Australia's support for MEDEP supports the development and livelihood needs of the

poorest and the most vulnerable. By addressing issues of exclusion, MEDEP is

contributing to securing the peace in Nepal."

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UNDP Country Director Anne Isabelle Degryse Blateau said "employment, especially

for the youth and women, is one of the top priorities for Nepal. AusAID's contribution

is critical to help promote this agenda, and we very much look forward to this

continued partnership."

MEDEP is a joint initiative of the Government of Nepal and UNDP since 1998 and

the program is being implemented in 31 districts of Nepal, according to the statement.

Since its inception, MEDEP has developed about 37,000 micro-entrepreneurs (67

percent women, 21 percent Dalits and 47 percent youth) and created about 42,000

additional sustainable jobs for the poor and excluded groups. The average increase in

the income of entrepreneurs has been 278 percent, the statement said

Source: http://news.xinhuanet.com

Date: 06/07/2009

International Financial and Economic News brief:

TOP STORIES

Fiat presses ahead toward Fiat-Chrysler-Opel combination

Sergio Marchionne, the charismatic CEO of Italian automaker Fiat, met with

officials of the German government as he accelerates his campaign to combine

Fiat, a restructured Chrysler and General Motors' European brand Opel into a

profitable automotive company with global reach. If the deal holds together, the

combined company will instantly challenge Europe's biggest automaker,

Volkswagen. The Times (London) (05 May.) , The Washington Post (05 May.)

About 10 stress-tested banks reportedly need more capital

Although the exact number is being debated, about 10 of the 19 banks involved in

the U.S. government's stress tests need to boost their capital, sources said. Bank of

America, Citigroup, Wells Fargo and regional banks are expected to be on the list.

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By raising capital, the financial sector might curb investor concerns. However,

investor fears already seem to be abating as bank stocks soared Monday.

CNBC (04 May.) , The Wall Street Journal (05 May.)

Banks, regulators in tense discussions over test results: Executives from the 19

largest banks in the U.S. were in tense discussions with regulators Monday, trying

to make their case that they have the resources to survive a worsening recession.

Government officials are expected Tuesday to explain to the executives the results

of the stress tests and how they will be disclosed to the public. Treasury Secretary

Timothy Geithner and Federal Reserve Chairman Ben Bernanke will present the

final results Thursday, a source said. Reuters (04 May.)

Survey: Banks tightened lending standards in past 3 months

The Federal Reserve's survey of senior loan officers found that banks continued to

tighten lending standards in February through April, putting additional pressure on

consumers and businesses. However, the survey found indications that the

tightening might be starting to abate. For example, 80% of U.S. banks tightened

standards for commercial real estate loans in January, while 65% did so in the past

three months. Financial Times (05 May.)

Asian nations might not need to tap fund, insiders say

Officials, economists and other insiders said Asia's $120 billion emergency

liquidity fund might not have any takers as the region's economy shows signs of

recovery. "It's better if we do not take the funds," said Anggito Abimanyu of

Indonesia's Finance Ministry. "If things are returning to normal, we don't need to

tap the funds. The fund is for contingencies." The Asian Development Bank

predicted 3.4% growth in the region this year and 6% growth in 2010. Bloomberg

(05 May.)

Investors gain $328M windfall through Build America Bonds

State and local governments might have unnecessarily handed a $328 million

instant windfall to bond buyers by using the U.S. government's Build America

Bonds program, which carries with it a federal subsidy along with restrictions that

might haunt issuers in future years. "Some of these may have been good deals for

the issuers, but could they have been even better?" said Ben Watkins, Florida's

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director of bond sales. "They could have had much tighter pricing." Bloomberg

(04 May.)

MARKET ACTIVITY

Signs of economic stability lift most Asian markets

Most Asian markets recorded gains Tuesday as investors focused on indications

that the global economy is stabilizing. Hong Kong's Hang Seng Index and China's

Shanghai Composite each inched up 0.3%, while Australia's S&P/ASX 200 eked

out a 0.2% gain. Taiwan's Taiex climbed 0.8%, New Zealand's NZX 50 jumped

1.9% and Singapore's Straits Times added 1.8%. Stock markets in Japan, Thailand

and South Korea were closed. The Wall Street Journal (05 May.)

Asian bond issuers could focus on non-U.S. investors again

Before the credit crunch, many Asian bond issuers focused on non-U.S. investors,

but they were forced to look to the U.S. as demand fell. Known as "Reg. S only,"

the smaller offshore bonds from Asian issuers sold to mostly European and Asian

investors are poised for a comeback. "There's a chance that the Reg. S market

comes back for those who tend to raise smaller amounts. A well-known company

looking for $300 million, for example, could potentially do something in the Reg.

S market," said Paul Au, head of Asian debt syndication at Citigroup. The Wall

Street Journal (05 May.)

ECONOMICS

Commission changes forecast, expects EU to contract 4%

Tossing out its January prediction of a 1.9% contraction, the European

Commission more than doubled the figure and said the EU economy will shrink

by 4% this year. Europe's recovery will not begin until the second half of next

year, and joblessness in the region will hit 10.9% in 2010, the commission said.

BBC (04 May.)

Budget deficits climb in eurozone beyond 3% of GDP

Budget deficits have soared higher than the EU's restriction of 3% of GDP, with

13 of the 16 eurozone countries over the limit and facing what could be an even

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tougher economic climate in 2010. Despite the dark forecast, EU finance ministers

are pressing ahead with the expensive economic-stimulus programs they adopted

to blunt the impact of the recession. Forbes/The Associated Press (04 May.)

India's growth stalls as foreign investments dry up

Indian policymakers' hopes that the nation will make it through the global

recession relatively untouched are fading. Inflows of capital necessary to fuel

economic growth are dwindling. The New York Times (04 May.)

Getting U.S. manufacturing on its feet won't be easy

After a 15% plunge in production during the past year, a manufacturing rebound

in the U.S. will not come quickly or easily. Manufacturing tied to heavy

construction, including roads and bridges financed by the Obama administration's

stimulus, will probably be the first area to experience an upturn, economists said.

Next in line for good news are steel producers and electronics manufacturers that

focus on energy efficiency, they said. BusinessWeek (04 May.)

Pending sales of existing homes continue rising in U.S.

For the second month in a row, the National Association of Realtors Pending

Home Sales Index, which tracks sales under contract but not closed, posted a gain,

an increase of 3.2% in March. The data demonstrate that "as far as the housing

sector is concerned, we are getting near the bottom," said Nigel Gault, chief U.S.

economist at IHS Global Insight. Yahoo!/Reuters (04 May.)

GEOPOLITICAL/REGULATORY

Australia's central bank holds benchmark rate at 3%

After six months of aggressive interest-rate cuts aimed at boosting economic

growth, the Reserve Bank of Australia left its key interest rate at 3%, the lowest in

50 years. The decision followed the release of data showing that approvals for

construction projects increased by 3.5% in March. The Australian (05 May.)

ECB likely to reduce interest rates to 1%

Economists expect the European Central Bank to drop interest rates to a record

low when its Governing Council meets Thursday. The ECB is also expected to use

other aggressive measures to stabilize the eurozone economy. ECB President

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Jean-Claude Trichet indicated that the central bank is considering quantitative

easing similar to moves made by the Bank of England and the Federal Reserve.

The Times (London) (05 May.)

S. Korean regulator calls banks' troubled assets "manageable"

Kim Jong Chang, governor of South Korea's Financial Supervisory Service, said

the country's banking industry will begin to see its profits recover in 2010. "The

worst is behind us," Kim said. "I still see little chance of a dramatic improvement

in profits in the near future." South Korean banks' bad-loan ratios hit a four-year

high in the first three months of this year. Bloomberg (05 May.)

FINANCIAL PRODUCTS

Tradable trusts to offer bets on housing boom or gloom

Two exchanged-traded products will give investors the opportunity to bet on the

direction of U.S. residential-housing prices, as measured by the Standard &

Poor's/Case-Shiller index. Investors who think prices are headed up can buy the

MacroShares Major Metro Housing Up Trust, and those who anticipate prices

going down can invest in the MacroShares Major Metro Housing Down Trust.

MacroMarkets created the products. The Wall Street Journal (05 May.)

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