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Archive for the month “October, 2013”

Fama, Shiller, Hansen Win Nobel Prize For Asset-Price Work




The widespread criticism of economists’ failure to predict the banking crash was addressed on Monday, 14th October by the Nobel committee when it awarded the much coveted prize for economics to three academics who try to show how financial markets work.
The Royal Swedish Academy of Sciences awarded the prize to Eugene Fama and Lars Peter Hansen of the ultra-conservative Chicago school alongside Robert Shiller, the liberal Yale economist famous for warning of the US sub-prime housing bubble in 2005. Fama and Hansen, two followers of Milton Friedman’s free-market theories, said they were surprised to win the annual prize which they agreed would turn their lives upside down. The academy said it was honouring the three prizewinners for their work examining the way markets work. They will share the prize of Swedish Kroner 8m (£781,782) equally. The academy said the three economists were at the top of their field “for their empirical analysis of asset prices that greatly improved our understanding of how financial markets work, when they seem to work well and when they seem to work otherwise”.
Fama, 74, is notorious in leftwing circles for denying financial bubbles exist and asserting recessions are a largely unexplainable fixture of capitalism that should be allowed to take their course. His research has examined how external factors such as insider trading and government regulation can distort the workings of financial markets. In the years before the crash he joined other disciples of Friedman, including former Federal Reserve boss Alan Greenspan, in defending the efficient-markets hypothesis that underpinned the deregulation of the banking system.
In the aftermath of the banking crash, Fama blamed the US government, arguing its policy of loosening laws restricting access to credit was at the heart of the crisis. He said the banking industry acted rationally in response to distorting incentives put in place by an interfering government. The American mortgage giants, Fannie Mae and Freddie Mac, were encouraged to lower the bar to lending, fuelling the sub-prime boom.
“The financial markets were a casualty of the recession, not a cause of it,” he told the New Yorker in 2010. Fama has recently specialised in producing models that show the way stock markets and other asset markets work.
Hansen, 60, is best known for his work modelling how economic actors cope with risk and changing environments. Fama and Hansen join 87 other Nobel Prize winners affiliated with Chicago University. Their success means eight Nobel winners will be working at the faculty, including six in economics.
Shiller, 67, has risen to prominence following a career that has seen him adapt free-market theories to take on board concepts of exuberance and irrationality. Unlike Fama, who denies it is possible to measure whether assets are overpriced, Shiller has documented how markets can fall victim to bubbles that become unsustainable.
In a video interview with the Guardian last year he said finance was not about making money but making money work for the good of communities. His book Irrational Exuberance, published in 2000, debunked the idea that markets always price assets efficiently, without triggering bubbles.
The academy said: “While it is hard to predict whether stock or bond prices will go up or down in the short term, it is possible to foresee movements over periods of three years or longer. These findings, which might seem surprising and contradictory, were made and analysed by this year’s laureates.”
Americans have dominated the economics awards in recent years; the last time there were no US economists among the winners was in 1999. The Nobel committees have now announced all six of the annual awards for 2013
Lars Peter Hansen
In another triumph for Chicago University, Hansen, 60, has been rewarded for his work developing a statistical method to test theories of asset pricing.
In 1982 Hansen presented a statistical theory – called the Generalized Method of Moments – then used it to test whether historical share prices were consistent with the best known asset-pricing model at the time. He found the methods being used must be rejected because they failed to explain share movements. As a result, Hansen’s work helped confirm Shiller’s preliminary findings on bubbles and inspired new research.
Eugene Fama
Chicago University states that Fama, 74, “is widely recognized as the father of modern finance”, although that boast is clearly double-edged given the markets’ recent performance.
His views are considered to be the direct opposite of Shiller’s, as they are based on the “efficient markets hypothesis”. This is the idea that markets incorporate all known information about an asset’s value, making it pointless trying to predict which way they will move.
Robert Shiller
Shiller, 67, is one of the few economists who can claim to have foreseen both the bursting of the dotcom bubble and the US housing crash.
His prescient book Irrational Exuberance was first published in 2000, and he followed it up with a second edition in 2005, which took the then unfashionable view that US housing looked dangerously overvalued.
He has given his name – along with colleague Karl Case – to the most closely watched housing market indicator in the US, the S&P/Case-Shiller Home Price Index. His most recent book, Finance and the Good Society, is about the benefits of financial innovation.



–By Bhawani Timilsina
Ram Krishna Prasain, Managing Director Shikhar Shoe
Ram Krishna Prasain
Managing Director
Shikhar Shoe
When one looks for a name of a popular domestic shoe brand, ‘Shikhar Shoe’ is likely to come up. The brand is known for producing a variety of shoe styles including party shoes, school shoes, casual shoes and sports footwears. Ram Krishna Prasain, managing director of the company, says brand ambassador Deepak Raj Giri‘s association with the company has helped promote the shoe brand in recent years. Prasain says that the initial phase of the company was difficult being one of the first domestic brands to test the market. “But with the flow of domestic brands now, many Nepali footwear companies have been taking a sigh of relief.”
Shikhar Shoe has developed itself as a special stylish brand among Nepali clientele. Besides, the brand also provides a wonderful choice collection. The company has rolled out women’s sandals and footwear as well. This indicates that the current marketing strategy of the brand aims to attract consumers of all groups. The company is now shifting its strategy by manufacturing shoes targeting high-end consumers.
The company has applied various brand promotion strategies. Most advertisement campaigns of the company include innovative brand promotional schemes such as the Shikhar Shoe Style Scholarship Scheme. The brand has now become synonymous with style along with promotional ad campaigns that are appealing to viewers.
“Growing competition has been good for the improvement of Nepali footwear brands,” Prasain says. Established in 2052 B.S., the brand has made an 18 year-long journey in the market.  On the basis of goodwill as well as the sales figure of the company, Shikhar Shoe claims to be the second largest selling shoe brand in Nepal producing 150 pairs of shoes per day.
The company plans to sustain its brand leadership in the days to come. It has come along with various schemes and offers prizes during festive seasons too. “We have been enjoying a huge brand loyalty. The brand has refined its image and relationship with consumers and keeps them interested using numerous branding strategies,” Prasain says.  Increasing sales figures, customer’s attention and a range of designs combine to enhance the brand identity.
The company was also the first in Nepal to install the technology of the ‘conveyer system’ – this enables large quantities of production while reducing time for manufacturing. The company has thus been working towards advancing manufacturing technology and meeting consumer expectations. “The buying patterns of customers are changing which means that people are now getting used to different brands of shoes produced locally,” Prasain adds.
Shikhar Shoes

Work Hard, Party Harder

–By Upashana Neupane 
How would a major entrepreneur in the country manage his work life and life beyond office hours?
Shekhar Golchha, a prominent business figure in Nepal, shares that it is not a tough job, at least for him. He believes that managing one’s personal and professional life is not difficult if one is able to manage oneself well. Golchha says this being a very well-managed person himself.
Golchha shares that he never mixes up his work life and personal life. He keeps his office and off-office hours separate unless it is an emergency. “I don’t take even a single paper home,” he shares.
While taking a break from work, Golchha likes to hang out with friends and travel. A big-time traveller, Golchha has been to 60-70 countries around the world. And when he travels, he chooses his destination for adventure and thrill. Golchha has the spirit of an explorer. Whenever he goes out for vacation, he always makes sure the destination would be one from which he can learn new things. “I am not into shopping and beach holidays,” he shares, “I choose a place where there is action and adventure.” Golchha’s love for adventure can be found in his passion towards trekking and mountain biking.
Golchha’s craze for trekking has taken him to places like the Everest Base Camp, Annapurna Base Camp and Annapurna Circuit inside the country and Mt Machu Picchu of Peru, glaciers in Argentina and several mountains in Turkey. “Trekking has always been my passion,” he says. “If I had more spare time, I would trek more.”
Golchha is a big socialite as well. He shares that he so much hates being alone. “I have to have people around me constantly to keep talking and sharing my ideas,” he says smiling.
He believes that taking a break in anyone’s life is very important. “One who doesn’t take a break can never be creative,” he opines. He believes that one, who only works, lives only 50 per cent of his life.
Apart from his love for adventure, Golchha keeps his interest in sports too. Though he doesn’t play much, he follows football and cricket. Golchha is available and updated in some social networking sites as well.
This adventure-loving business tycoon wishes to trek more and learn photography if he had more spare time. He also dreams of learning to fly a helicopter some day.

A Click Here And A Market There: The Growing Camera Business


–By Suraksha Adhikari 
Everyone has memories — bitter or sweet. With time memories tend to fade, but if you want your memories to sweeten as they age then thank technology — the camera is at your service.
With the cheer of the festive season, the market is crowded with people busy in buying goods for the festival. People, unlike in former festivals are interested towards technology. The importance of technology as connective devices in festivals and other occasions have allured people in many ways. Similarly, people are also attracted with the series of discount offered during the festival.
Traders say that because of the festive season, the sale of cameras – be it digital or SLR have been increasing. The camera is being recognized as a necessary gadget in today’s context. Its significance has increased much in festivals. People prefer cameras to capture moments of joy and during festivals and other occasions.
Growing Trend
There are a variety of cameras in the market including digital cameras and high resolution single lens SLRs. Digital cameras are preferred by people as it is easy to carry and easier to handle. Similarly, DSLR cameras are used by people for better quality pictures or to cover wider shots.
One of the advantages of the digital camera is that there is no limitation in the number of pictures that can be taken. Along with this, the pictures captured can also be transferred to computers and can be developed according to the wish and feasibility of the people. People prefer digital cameras to analog cameras as they cannot capture the picture more than the number set in the photographic film. Traders say that the increasing trend of these digital cameras have an effect on the sale of branded cameras.
The growing market of digital cameras clearly shows the growing interest of people towards it. Traders opine that digital cameras have a lot of opportunities in the Nepali market.
Brands Available in the Nepali Market
With a large variety of cameras in the Nepali market, some famous brands available in the market are Canon, Sony, Samsung, Philips, Panasonic, Nikon and others.  All authorized dealers of these cameras in the Nepali market have introduced new model cameras during the festive season with a series of offers.
The market is full of stores that deal in digital cameras of different brands.  Stores in New road like Galaxy Photo, Royal Traders, New Amber Impex, Digital Camera Spot and more deal popular brands like Nikon, Canon, Sony, Samsung, Fuji, Olympus, Panasonic and Kodak for compact digital cameras with one year warranty. These stores also sell professional Digital Single Lens Reflex Camera (DSLR) of all brands mentioned.
Primex International – Canon’s authorised dealer in Nepal; Him Electronics – authorized dealer of Samsung in Nepal; and NepaHima Trade link – authorized dealer of Sony have introduced a new model of respective cameras on the occasion of Dashain and Tihar.
New Amber Impex also has camera accessories of brand UBCX such as camera bags, tripod, camera case, filter and more as per the requirement of the customers. About the cameras found in Galaxy Photo Mukesh KC, a staff at New Amber Impex informs, “The products are from Singapore whereas the brands are Japanese.”
Most products at these stores are from local authorised dealers where Purushottam Thapa, staff at Royal Traders shares, “The brands are all Japanese and the cameras are assembled in China.”
There are various kinds of digital cameras available in these stores in Kathmandu where the customers can opt for simple portable compact digital cameras as well as professional DSLRs. According to Sunil Goel, staff at New Amber Impex the brand Sony also has water proof compact digital camera.
There are various series where the function and system varies accordingly and he adds, “In the compact digital camera of Sony WX50, you can get a panorama function for a wider view and a 3D movie function as well. Likewise, in compact digital cameras of Cannon IXY420F, you will get high mega pixels, full HD, Image Stabiliser with Wifi and a touchscreen.” Shopkeepers say that while purchasing a camera one must look into the print order that compact digital cameras offer rather than high megapixels. The quality of print depends upon the print order where Sony has A3 size print order, Cannon has A2 and Samsung has A1.
In portable digital cameras, you can get colours as per your wish ranging from silver, black, pink, blue and more. “The camera must have cases or bags. And while handling a compact digital camera, it would be better if you use the strap of the camera while using it,”says KC from New Amber Impex.
Market Status in Nepal
The customers are interested in digital cameras as they can get a high resolution camera in relatively cheaper prices. At a minimum price of Rs 7000, people can get cameras with a focus of 8 megapixels.
The traders say that in comparison to the brands of other countries, customers prefer the brands of Japan and Korea. Digital camera of Sony from japan is popular in Nepal. Dinesh Agrawal, Sales Manager of Primex International says that this brand is more popular in the Nepali market as it has various new features in comparison to other old model cameras.
Similarly the price of the digital camera is also decreasing because of high competition between various brands of cameras. These cameras attract customers because of their portability, easy handling features and various features with
high quality.
Encouraging growth in sales aside, traders are experiencing various hurdles in this business. Though the competition is very high, traders claim that quality maintenance is not fair in the market. With the plethora of products available in the market, complaints about duplicate products are also on the rise. The growth of unhealthy competition and duplicate products that degrade market credibility is one of the few negative aspects in this business.
Photo Shop

Pokhara, Tourism & Sustainability Issues

–By Ramji Sharma
Tourism, a 21st century industry, acts as an agent to induce change in socio-cultural values and norms of a society. Social and cross-cultural contacts, encounters and interactions are inherent aspects of tourism and its impact and implication numerous and varied. The United Nations Environmental Programme says that the implications of tourism are ambiguous, for the same activities are seen as beneficial by some and perceived negatively by others – especially with regard to disagreements between business interests and environmental consciousness.  ‘Sustainability’, thus, has become a buzzword in tourism academia now.
To analyze the impact and implication of tourism in Pokhara, a model called ‘FIDELL TALCADS’ (acronym of thirteen selected variables) was devised and tested here. The variables were:
Family structure / Social composition, Indigenous profession, Dining patterns, Emotion, Attitude and Behaviour, Lifestyle and Fashion, Labour division, Traditions, values and norms,  Arts, crafts, curios and music, Language, Crime, Alcoholism / Smoking, Drug abuse, Sex
The research shows that the effects of tourism can be measured in various social aspects.
Dining patterns
Food, it is believed, is the most important cultural expression that can sometimes be the reason of travel for some people. Ethnographically, Nepal is one of the richest countries in the world with 125 ethnic groups and 123 spoken languages. Different communities have different types of food to begin the day with. A most popular ritual which has now become a habit for many Nepali people is to wake up with a cup of tea. However, this common habit was only found in 25.86 per cent of the respondents at Lakeside, Pokhara. The percentage of respondents that articulated their preference for light break-fast in the morning with a cup of tea or coffee, on the other hand, was 74.14 per cent, and none of the breakfast choices included an item from the traditional Nepali cuisine.
Emotion, Attitude and Behaviuor
Tourism creates wide socio-cultural implications as tourists bring their distinct cultural baggage when they visit different places. The most striking feature of tourism is interaction and intermingling between hosts and guests that slowly penetrate and infuse a large number of small effects which individually appear insignificant but together make an impact.
Lifestyle and Fashion  
Akin to the cultural variation in hospitality, tourism has multifarious implications on various aspects of human life. However, the intensity and mode may vary depending on the frequency of interaction, cultural distance and age groups that come into contact with tourists of different cultural values and lifestyle. Of them, the younger generation seems to be highly influenced by tourism. Most youngsters feel modern when they copy, follow or imitate the styles of tourists (mostly western) which is also called ‘the demonstration effect’ in tourism. The popularity of the multicolored shaggy hair, hair raise, hip-hop outfits, bra-less transparent tops, colour tattoos, piercing in various parts of the body are some of the noticeable demonstration effects in these communities.
There is a significant influence of tourists on the lives of the waifs and stray children of the streets. Destitute children stroll around until they find kind tourists after which they swarm around the tourists begging for money, chocolate or sometimes ask them to take them to restaurants for dining. The children (and sometime seniors too) often dress in tattered clothes and prey upon the sympathies of the tourist who give them something and eventually turn them into professional beggars. Begging has become the best modus operandi for street children for easy living in spite of clearly written instructions given to visitors to not to give anything.
Traditions, Values and Norms
Each unit of society has a set of traditions, value systems, beliefs, ideas, attitudes, perceptions and habits. The growth of tourism may produce both problems and opportunities at a vast scale for societies and its main impact might be on the economy, culture and environment.
Grand celebrations targeting the English New Year and Christmas is probably the best street carnival in Pokhara, indicating western influence. A perceptible void of festivity during the Nepali New Year and Dashain-Tihar signifies the westernization of tourism in Phewa Lake catchments. Regardless of this, respondents added that tourism has inculcated a broader outlook through knowledge and awareness that are not only desirable but also necessary to improve the quality of life of people in particular, and the society in general.
Art, Craft Curios and Music
Some artistic creations and expressions like painting, music, dance, architecture and other areas in the arts hold appeal for tourists.
Tourism has a very supportive role in promoting ethnic and indigenous music, dance and songs in Pokhara. Respondents have noticed a sizable increase in Rodhi culture, Dohari, Ghantu, Sorathi, Chhyandu and Jhyaure in the Lakeside area due to tourism.
Nature-based tourism in the spectacular milieu of our cultural mosaic is the core competence of the Nepali tourism industry. But nature and culture both are vulnerable and cannot remain in isolation from tourism. The example of Pokhara’s westernization shows that tourist cultures always dominate the host culture and in many cases, hosts are the losers despite the financial leverage they get. Coming close to Social Darwinists and Neo-Marxists, analysis has proved that tourism is a strong agent of socio-cultural diffusion, infusion, acculturation and assimilation with an anthology of a complex synthesis of various interconnected socio-cultural, environmental and economic influences, though although it primarily turns up as an economic enterprise.
Further, socio-cultural influences and implications are not as apparent as economic impacts are. Such impacts are indirect, qualitative and hard to identify. They depend on value orientation and are also ambiguous. Thus, we can conclude that the impact and implications of tourism on the host society are latent, slow, but penetrating and lasting; and the impact individually appears to be insignificant, but together they vibrate and weaken the socio-cultural system.
It is revealed that tourism, in many cases, appears as an exploitative envoy rather than an economic panacea till the destination remains a ‘pleasure periphery’ of the developed world and the traveler becomes a tourist, not a social activist. Therefore, the paradise valley of Pokhara has to focus on value tourists and not on volume of tourists to retain its charm and authenticity. A proposition which might be appropriate for tourism development in a developing destination like Pokhara is ‘Community Based Responsible Tourism’ (CBRT) which emphasizes on having a balance between tourism growth, ecological conservation, economic prosperity, socio-cultural authenticity and sustainability.
(The writer is a PhD research fellow in Tourism at TU / Principal at Mount Annapurna Higher Sec School, Pokhara. He can be contacted at:


Economic Freedom: Hong Kong, Singapore On Top, US Falls In Rankings

The United States has fallen 15 places since 2000 in the global ranking of economic freedom, while Hong Kong and Singapore maintained their top spots.  The ‘Economic Freedom of the World’ report 2013, compiled by Canada’s Fraser Institute, ranks Hong Kong first with an overall Economic Freedom Rating of 8.97, followed by Singapore (8.73). In the area of credit market regulations, both the East Asian City States scored 10 out of 10. The United States is positioned as the world’s 17th freest economy behind nations such as New Zealand, Switzerland, United Arab Emirates, Mauritius, Finland, Bahrain, Canada, and Australia, who are in the top ten. Throughout most of the period from 1980 to 2000, the United States was ranked as the world’s third-freest economy, behind Hong Kong and Singapore.
The U.S. ratings and rankings have fallen in all five areas of the EFW index. The worst reduction was in the area of Legal System and Property Rights, where the rating had slid to 6.93, placing the United States 38th worldwide, tied with Venezuela. The report blames the slippage of the United States, once considered a bastion of economic freedom, on ‘overspending, weakening rule of law, and regulatory overkill on the part of the U.S. government.’ Major countries that ranked below the United States include Germany, Japan, South Korea, France, Italy, Mexico, Russia, Brazil, and India. China, despite being a major economic power, is ranked as low as 123rd in a list of 152 countries. Eight of the ten lowest-rated countries are located in Africa, with Myanmar and Venezuela ending up in last place.
The index published in the report, which was compiled using data and surveys from the World Bank, International Monetary Fund, and World Economic Forum, measures the degree to which the policies and institutions of countries are supportive of economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of privately owned property. The degree of economic freedom to rank countries was measured using five criteria: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation.
The average chain-linked economic freedom rating for the countries has increased from 5.34 in 1980 to 6.87 in 2011.  Nations that are economically free out-perform non-free  nations in indicators of well-being. Nations in the top quartile of economic freedom had an average per-capita GDP of $36,446 in 2011, compared to $4,382 for nations in the bottom quartile in the same period. Life expectancy is 79.2 years in nations in the top quartile compared to 60.2 years in those in the bottom quartile. Political and civil liberties are considerably higher in economically free nations than in less free nations.

Nepal Falls among Least Economically Free Countries
Meanwhile, Nepal remained among the least economically free countries in the report for this year. The report states that the degradations in terms of the legal structures and security of property rights and size of the government weighed down on the economic freedom of the country. Nepal ranked 125th out of 152 countries in the report. According to the report, Nepal scored 6.19 out of 10. This marked the further degradation of economic freedom in Nepal.  Last year, the country was placed in 110th position out of 144 nations and scored 6.33 points in the index.
The ‘Economic Freedom of the World Report 2013’ further emphasized the Nepal government size to be reduced. Regarding the area of ‘size of government’ in the index, Nepal scored 7.6 in 2013 (31st position in the world) against 8.34 of the previous year. The area of ‘freedom to trade internationally’ also declined to 6.4 (118th in the world) which scored 6.74 in 2012.
However, the report also showed that Nepal made little progress regarding areas of ‘legal structures and ensuring property rights to its citizens’ with a score of 4.2 (126th in the world) this year against 3.85 of 2012. Similarly, the country also performed better in the areas of ‘access to sound money’ and ‘regulations on credit, labour and business.’ With the improvements in taming of inflation and money growth in the financial system, the area of access to sound money improved slightly to 6.3 (136th in the world) from last year’s 6.26. Likewise, the area of regulations on credit, labour and business also rose to 6.5 (109th in the world) from 6.47 last year.


‘Flagship Carrier Should Be Revived For Tourism Growth’

Sagar Pandey
The thought that the private sector should now take the lead in boosting the tourism industry is gaining momentum. That one in four visitors to Nepal go trekking should say something about the popularity of this activity in the country. Around 1000 trekking agencies are affiliated with the Trekking Agencies’ Association of Nepal (TAAN). Sagar Pandey, Executive Chairman of the Himalayan Glacier Trekking, was elected as the General Secretary of TAAN at the recently held general convention of the association.  The Corporate’s  Sagar Ghimire, spoke to Pandey this week about the challenges and problems of trekking agencies and their role in private sector-led tourism development. Excerpts:
Can it be inferred from the political leverage seen during the general convention of TAAN that the association is under the control of political parties rather than trekking agencies?
Though I cannot rule out the inclination of an individual towards a certain political party, TAAN is a purely professional association representing professional trekking agencies. We do not hold any political baggage so we are a non-political entity.
What are the challenges and problems in running trekking agencies? 
Tax/VAT for this service sector, illegal trekking operations threatening our cottage industries and penetration of international investment in this business, among others, are short term challenges we are dealing with. Long term problems include the collapse of trekking routes due to the expansion of roads, development of tourism infrastructure, developing new trekking trails, promoting tourism and policy reforms.
Also, since this is a service sector, 13 per cent VAT/tax is too high for us to afford. It is not judicious to charge the service sector VAT as much as the manufacturing sector is charged. All entrepreneurs should be brought under the VAT, and the government should lower it to 4/5 per cent as is the international practice.
Are trekking agencies dissatisfied with the government’s attitude for tourism development?
The recently commemorated international tourism  day was just an opportunity for the government to repeat its rhetoric on the importance of tourism for the country’s economic growth. Unfortunately, no effective plans toward such sector were presented. There is no research on how tourists make their plans, what the international trends are in tourism, why tourists come to Nepal, and what should be our strategies. Even after one and a half years of the completion of Nepal Tourism Year (NTY), the report of the event is yet to be prepared. How do you review the performance of stakeholders with this laid back approach?
What are the marketing and promotional plans of TAAN to brand Nepal as the world’s best trekking destination in the international market?
Apart from participating in world exhibitions and trade fairs and using international media, we think reviving our flagship national carrier Nepal Airlines Corporation which connects Nepal to the world can double the number of tourists. Provided that our national carriers has flights to multiple countries, the arrival of tourists can increase significantly. We will pressure the government for this.
It is said that the price undercutting by trekking agencies is responsible for the decline of tourists’ spending despite a rise in their numbers. What will TAAN do to curb such practices?
With the lack of correct data, we make evaluations through hypotheses or the record of the World Bank or other multilateral agencies. The concerned agency should come up with a proper data keeping system which will help us address this problem. Undercutting of price also results from a competitive market. Gone are the days when tourists used to come without information of the price. We cannot fix the price of any package in a free market. However, we can only create awareness about ethical practices through various forums. We cannot stop them even if they run their agencies on a loss by providing services at low prices.
Acknowledging the role of the private sector, a provision has been made for the private sector’s representation in the Nepal Tourism Board. What is your assessment of its performance?
Interactions with representatives of the tourism sector, have shown that the planning, execution and other roles of the NTB have not been up to our expectations. The post of Chief Executive Officer of NTB has been vacant for the past two years. We maintained that there should be representation on the board of NTB from professional associations like TAAN and NATTA. Only this can ensure true representation of the private sector as well as avoid controversies and politicisation.
What are some future plans in developing new trekking trails? 
There is a need for parallel trails where previous ones have collapsed due to road expansion. Since our geography is complicated, we must collaborate with the government for developing trekking trails. We have been stuck with the same old trails like Annapurna and Langtang trails, but we have to make new trails that encompass the mountains stretching across the country.
How is revenue collected from the distribution of Trekkers’ Management Information System (TIMS) cards?
The revenue of TIMS is for developing infrastructures, promoting, conserving and maintaining trekking trails. A committee was formed for the monitoring of the TIMS revenue. We will plan to spend this money constructively following the report from this committee.

The Everest Group: Climbing Higher

Sanjeev Saraff ,CEO ,Everest Group
Sanjeev Saraff
CEO, Everest Group
Everest Group Nepal is a pioneer group of companies in the sectors where it has had involvement since its inception. Whether it is petroleum product imports, operation of a cardboard factory or the paper industry, the Everest Group has been a pathfinder in Nepal in these sectors.
The group has begun an expansion drive with plans to venture into the pharmaceutical industry and to add new plants and production capacity in some of its factories. The Everest Group plans to bring its pharmaceutical company, Himalayan Parental and Pharmaceutical Company, into operation by next year. This new company will be producing life saving drugs and intravenous fluids. Sanjeev Saraff, CEO of the group, claims that it will be the first company of its kind in Nepal and that it will install the latest technology that has never been used in Nepal.
The group has recently set up a new factory for producing non-woven fabrics. Everest Plasto has already started production. Saraff says that it is also one of the first factories in Nepal to produce non-woven fabrics.
Likewise, Saraff reveals that the group is coming up with another sugar mill, Himalayan Sugar Mill in Mirchaiya. He says that the manufacturing unit is under construction and will be brought into operation in the next two years. Saraff says that the unit plans to sell electricity produced in its own thermal plant to the government during the winter season.
Local Targets
According to Saraff, the group has always kept the local market and local raw materials on priority for all its productions. He says, “We have been successful only in those industries where the raw material has been Nepali and the market in Nepal.” Whether it is the paper factory or the sugar factory, the group has always been using local raw materials and targeting Nepal as its prime market. Saraff says that the group once tried its hands on copper processing by importing raw materials and exporting the final products. He says that it turned out to be a sort of trading business and did not perform well. However, the group still owns and operates Everest Wire factory that has majority market shares in the Tarai region.
The group targets Nepal as its prime market for upcoming pharmaceutical ventures as well. Saraff says that 100 per cent of life saving drugs and IV fluids are imported and the factory aims for import substitution.
Market Coverage
Saraff claims that the Everest Paper Mills’ production covers majority of the local market while the sugar mill also has leading market share among half a dozen other Nepali companies.
He says that the group’s only strategy to conquer the market is through quality assurance and its dealer network. Saraff further explains that some of the dealers have worked with the group since its establishment.
The prime markets for Everest Groups’ products are Kathmandu, Pokhara and markets in the Tarai region. The secret of a strong relationship with its dealer network is to keep them happy, according to Saraff. However, the group has not considered branding as its major marketing tool. “Our products are commodities rather than consumer goods. So, we do not require branding as such,” he explains.  However, the group has been carrying out campaigns to inform its clients about the right use of products to extract maximum value out of it. Marketing activities through billboards and other media, though, are not carried out.
When asked about group branding, Saraff says, “We have less concentrated on group branding. Hopefully, we will get into it once we grow bigger.”
Saraff says that the group has been facing unethical competition from smuggled products through the open border of Nepal and India. “We decided not to compete with those products as it would be useless to compete with illegal products,” he says. He acknowledges the quality and competitiveness of peer companies and says, “Manufacturers of Nepal are equally competitive. So, the competition is more on offering quality than on price.” Saraff expects the government to control the smuggling of goods that have been a threat to legitimate companies.
Turning Point
The group had a major set-back when Everest Paper Mill was bombed during the Maoist insurgency. Saraff recalls that it was the first private sector factory to be targeted during the conflict. The bombing in 2005 left the factory completely destroyed. “We did not lose hope and we rebuilt the factory within two months’ time. Bankers and others too appreciated our efforts,” says Saraff. He adds that the group rebuilt a new and better factory immediately.
The group employs around 2500 people in four of its companies in operation. A strong human resource department has been looking after all human resource management activities. Entire management duties are given to this department. The department deals with labour issues as and when they arise. Saraff recalls the closure of one of the group’s factory for two months after labours came up with “unreasonable demands”.  “We made them realise that we were not going to bow down. We have been handling issues of labours and workers pretty well and the human resource department is pretty effective and strong,” he explains.
The management responsibilities of all four companies are handled independently by the management team assigned for each company. The team is headed by members of the extended Saraff family. He says that the group is still a family-owned business more than a corporate group. Second generation businesspersons educated abroad have been taking up responsibility and taking the business to new heights.
The corporate headquarter of the group is located in Janakpur, the place of origin of the group. While the Kathmandu office has been working as a liaison office to look after bureaucratic activities and maintaining relationship with banks, among other activities.
Dina Nath Saraff, father of Sanjeev Saraff is the founder of the Everest Group. Senior Saraff started his own import-export firm ‘Brij Mohan Dina Nath’ in Janakpur that dealt initially with importing clothing materials from India, Soda Ash and various kinds of spices from Malaysia and Indonesia. The firm was also involved in rice exports to India.
Similarly, Saraff acquired the sole agency of ESSO and of Brooke Bond tea in the 50s and 60s for Nepal and started marketing their petroleum products such as, Petrol, Diesel, LDO, engine oil, Kerosene oil, etc even before the Nepal Oil Corporation was established. By mid 1960s, he established another firm, Everest Trading Company, along with the Jhunjhunwalas in Biratnagar and started exporting jute to millers in India.
In the late 60s, Saraff established Janakpur Soap Factory that manufactured various grades of soap and marketed it under brand names Natraj and OX.  Similarly, a decade later, he and his son established Everest Cardboard Industry Pvt Ltd, the first in the country to manufacture corrugated boxes from Kraft paper imported from India and Sweden.  During that phase, he also established Tiger Tea Company whose raw materials were imported from India, blended and packed in Nepal and sold in Nepal under the brand name Tiger.
The group continued to grow and passed onto the second generation. Though some industries were closed in the process, its flagship production line such as paper and sugar has continued to rise. The group is now planning to expand its capacity and area of business in the near future.
Flagship Companies of Everest Group:
  • Everest Paper Mill Pvt Ltd
  • Everest Sugar and Chemical Industries Pvt Ltd
  • Everest Wire Industry
  • Everest Plasto
The group feels proud about exporting paper pulps to Japan. In the past, the group used to import paper and chemicals as raw materials. The group also tried its hand on importing fertilizers but stopped later. The group wishes that the country allows international trading in Nepal to export goods to
third countries.
The group wants to carve its own path in business without following what others are doing. Saraff says that his group is looking into new sectors for business and also hints that the group will be investing in the tourism sector in the next two to three years and will also explore new possibilities in food products the group had expertise on in the past.
Corporate Social Responsibilities
The group does not have overt corporate social activities but is carrying out several activities on its own. The group provides scholarships to 25 to 30 children every year from underprivileged families under the Bhagwati Devi Trust, named after Saraff’s grandmother. The trust has been annually sponsoring 40 to 50 children for their education. Similarly, Saraff considers Everest Paper Mills’ paper recycling plant a socially responsible activity of the group. “We are recycling waste paper and contributing to clean the country along with utilising agricultural residues,” says Saraff.

Nepal Certified As Full Member Of ISO


Nepal has been certified with full membership of the International Organisation for Standardization (ISO) during the 36th AGM of ISO in St. Petersberg, Russia. The membership will come into effect from January, 2014. Nepal is the 5th country in South Asia to be certified with full membership of ISO. Before this, India, Pakistan, Sri Lanka and Bangladesh were certified as members.
Minister for Commerce and Supplies, Shanker Prasad Koirala formally announced the ISO certification of Nepal amidst a programme at the Nepal Bureau of Standards and Metrology on Thursday. Koirala said, “This certification has brought immense possibilities along with challenges which we have to utilize and face.” He said that both government and private sector should work hand-in-hand for this.
Nepal is certified as a full ISO member after being a correspondent member of ISO for 21 years. “To get full membership of ISO is historical in itself,” said the Secretary at the Ministry of Industries, Krishna Gyawali. He added, “We have to pay around Rs 2.6 million to ISO for the membership but this will bring us a lot of opportunities and ways to profit.” Gyanwali urged concerned departments and the private sector to be more sensible in maintaining quality of production.
Ram Adhar Shah, Director General of the Bureau said that with the membership certification, Nepal has received opportunities to work with the world community in quality matters. He also said that this can contribute to Nepal’s export business as ISO is a significant trade tool.
Established in 1949 AD, ISO has done quality standardization of more than 19,500 goods. Similarly, the Nepal Bureau of Standards and Metrology also has done quality standardization of around 950 goods among which 12 are compulsory quality standards.

Hydropower Companies In IPO Rush


Once seen as a depressed sector, the Nepali energy industry is now becoming the centre of attraction among investors. The flocking of hydropower companies for share market listing is indicative of this. In recent months, Nepali hydropower companies have been rushing for initial public offerings (IPOs). Five hydropower developers have filed for IPO in the Securities Board of Nepal (SEBON). Some among them are said to have been permitted for issuing all kinds of shares, while IPO requests of some companies are under process.
Sanimamai Hydropower Ltd has closed the first round of IPO process which was carried on from September 20-24. Under this, the company sold shares  allocated to the project-afftected areas. In the next round, shares will be sold to the general public. Meanwhile, Ridi Hydropower Development Comapany, Upper Tamakoshi Hydropower Ltd, Varun Hydropower Company and Arun Valley Development Company Ltd are preparing for share issuance.
Sanimamai Hydropower’s IPO saw an astounding demand of company’s shares. The company which received IPO permit from SEBON on September 4 received share applications worth Rs 2.53 billion, 25 times more than demanded. “We have estimated the application to be 10 times more than the offered,” informed Tuk Prasad Paudel, CEO of Sanimamai Hydropower. The company which is developing the 22 MW Mai hydropower project in Ilam district is also constructing the 7 MW Mai Cascade Hydro project. “Shareholders will receive 5 per cent dividends in the second year after the projects start generating electricity,”said Paudel. According to Paudel, the company plans to raise the dividends to 10 per cent and 15 percent in 3rd and 4th year respectively.
Similarly, Ridi Hydropower issued shares worth Rs 30 million to the local residents of the project area on 28th September. Varun Hydropower is issuing shares worth Rs 24.3 million to the local residents in the project site. Likewise, Upper Tamakoshi is set to issue primary shares worth Rs 25.416 million whereas Arun Valley Hydropower is preparing for the issuance of rights shares worth Rs 350 million.
There are only four hydropower developers listed in the Nepal Stock Exchange (NEPSE) till date. Butwal Power Company Ltd, Chilime Hydropower Company Ltd, Arun Valley Hydropower Company Ltd and National Hydropower Company Ltd are the developers maintaining their presence in the share market thus far. According to data released by NEPSE, the total number of listed shares of the four developers reached 44.525 million (worth Rs 4.45 billion on face value). The share transaction of the companies also saw a staggering growth of 79 per cent in the fiscal year 2012-13 compared to the previous fiscal year.
Share market experts see the IPO rush of hydropower companies as a good investment opportunity. “The risks are less and the returns are larger in hydropower companies compared to other sectors,” says stock market analyst Rabindra Bhattarai. “Currently, there is less competition in the hydropower sector with certainty of return.” Bhattarai terms the IPO rush of power developers as the ‘next market boom.’ He also points out to the IPOs as a medium of fund raising for new hydropower projects. “This will definitely help build new projects and generate more electricity,” he adds.
Share investor Uddab Shiwakoti also agrees with Bhattarai’s view. “Initial capital investment in power companies is high, though the operating cost is low,” he says. “According to cost-benefit analyses, we can clearly see that the investment flow is tending towards the hydropower sector.”

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