• ‘Tis the season to be RED – The government’s contribution to NEPSE’s perennial fall

    For the past year, the bearish sweeping red flooding the secondary market in Nepal has wreaked havoc on millions of investor portfolios. The declining trend has been caused by a number socio-political factors including political instability and liquidity crunch in the banking sector as well as BFIs being forced to give out large numbers of bonus and rights shares as a result of increased paid up capital requirement. In addition to the supply demand mismatch, a recent directive released by the Inland Revenue Department further triggered a drastic reaction from investors plummeting the market by 76.02 points to a closing at 1231.64 points yesterday (10th June 2018) . This nosedive tailed the first of its kind boycott by Nepalese investors protesting an increase in the capital gains tax on bonus and right shares at the companies’ market value. Continue reading

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    En cashing Celebration

    I recently wrote on the economic benefits of the music industry in a given area/ town. While the article was focused on concerts (leading to a minor week long festival), a more lengthy version of the same can be seen in Brazil’s carnival and others. Nepal is home to pseudo-carnival celebrations in their own definitions be it the Macchindranath Jatra in Lalitpur that stretches over month long celebrations (along with Indra Jatra in Kathmandu and Bisket Jatra in Bhaktapur) which have strong historical and cultural significance but also see the Street Festival in Pokhara which is a more globalised version of a carnival. Continue reading

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  • Major challenges faced by carpet industry- High labour cost and labour related issues

    One of the major challenges faced by enterprises in Nepal is caused due to labour related issues. Due to the sectorial bargaining of the trade unions, the wage rate of labour has increased manifolds in the past. This sectorial bargaining which increased the wage rate is binding to all the firms in the industries including cottage and small. So, the wage rate of the labourers has been increasing in a regular time interval but labour productivity has remained the same. This trend has specifically inhibited the growth of carpet industry. Many cottage and small firms in the carpet industry have been forced to employ the labourers informally as they are unable to pay this increased wage to the formal labourers. Labour costs in Nepal are the highest in all of South Asia, with a total annual cost per worker of U.S Dollar (USD) 1,889, compared to a cost in Sri Lanka of USD 1,619, Pakistan of USD 1,052, India of USD 943, and Bangladesh of USD 789. Between October of 2010 and October 2011, labour costs have increased by 35% for carpet manufacturers in Nepal.

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