DISQUALIFIED MAOIST COMBATANTS CLOSE DOWN COUNTRY

DISQUALIFIED MAOIST FIGHTERS CLOSE DOWN COUNTRY

Kathmandu, 5 Jan.: Former 4,000 plus Maoist fighters disqualified by UMNIN , a political agency that quit Nepal 15 January 2001 without completing its assignment, shut down the
country since Thursday morning with a general strike
The former combatants charged government for ignoring their demands demanding relief ad other for relief and other facilities.
The phased strike from each of the five
development regions culminated in a nation-wide strike.
A vehicle of Indian multi-national company Unilever was torched in Makwanpur while another vehicle was smashed at Sundhara in the capital
for defying the strike order.
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1000 UNITS OF LAND, HOUSING UP FOR AUCTION
Kathmandu, 5 Jan : In a latest sign of deepening crisis in the realty market, banks and financial institutions (BFIs) have put around 1,000 land and housing for auction in the second quarter of the running fiscal in a bid to reclaim their troubled realty loans that soared to well around Rs 120 billion, Milan Mani Sharma writes in Republica..

Contrary to normal circumstances, when such auctions barely used to cross over a dozen in a month, a snap survey reckons that national dailies are carrying around 10 fresh advertisements of auction notices every day.

For developers like Min Man Shrestha, general secretary of Nepal Land and Housing Developers Association, such a situation was not unexpected, as property transaction has come to a virtual standstill and they are finding it harder to recoup the money invested for developing the residential plots and housing to settle loans.

“Don´t be surprised if you find some 3,000 units of land and housing being put on auction over the next couple of months. With the central bank continuing to deny policy relaxation and bankers focusing only on recovering loans, such a scenario is obvious,” said Buddhi Narayan Shrestha, a land and housing expert. The crisis ignited by the realty sector doesn´t end here but magnifies as BFIs are finding no buyers.

“The situation is pretty alarming since around 75 percent of realty sector borrowers are not servicing even interests, and there are no buyers to bid for auction as there is no financer,” said Rajendra Man Shakya, president of Nepal Finance Companies´ Association.

Records show BFIs have so far invested around Rs 120 billion, which is well around 15 percent of their total loan portfolio, in the real estate. The Nepal Rastra Bank suspects real exposure could be much higher as it has found that even the loans issued under different headings have indirectly found their way into the sector.

However, as conflict in Tarai and hills (which spurred forced migration), easy bank financing and low interest rate buoyed the market, prices rose unnaturally. At one point in 2009, developers informed Republica property price had doubled in a span of just three months.

Such unnatural price rise, meanwhile, created concerns over ballooning asset bubble and financial health of the BFIs. As a result, NRB in Jan 2010 capped BFIs loans into the sector and sought them to gradually lower their individual exposures at 25 percent.

The intervention, however, dried fresh loans and the market took a plunge within six months. Even though the central bank made some relaxations for personal housing loans and excluded home loans up to Rs 8 million from the category of real estate, those failed to encourage the buyers.

“People now know developers are in trouble and with banks tightening the knots will force them to cut prices. They will not buy land and housing until prices crash,” said Buddhi Narayan Shrestha.

He even viewed that cutting prices by certain manageable margin will not hurt developers as well as that will at least spur demand and help them plough out the stuck money.

But developers are not ready for that. “How can we cut prices if that does not help us recover investments?” said Min Man Shrestha.

Such preference of the developers to withhold the risk, meanwhile, has turned BFIs nervous.

Although there is no official study that can ascertain the extent of shock, bankers said they estimate such rigid position of developers could turn at least 10 percent of the total assets flown in the sector as bad.

If their estimate turned true, it will instantly raise BFIs non-banking assets and shrink their profits by at least Rs 10 billion. Interestingly, profit of commercial banks in the last fiscal year had totaled just above Rs 19 billion and bankers said they simply cannot afford to lose the profit by such a huge margin.

“Such risk has compelled us to focus more on our balance sheets, instead of providing any relaxations to the real estate players,” said Ashoke Rana, president of Nepal Bankers´ Association. His statement clearly indicates that the bankers might further tighten their knots on the real estate players in the days ahead.

If that happened, prices will crash, predicted Buddhi Narayan Shrestha. But he cautioned it will also force many developers to quit their businesses, as total money that they will recoup at lower prices will still leave them short of funds to settle all the accounts with the bank.

“The crucial question facing the policy makers at this juncture, hence, is: can our economy absorb this correction without pain?” he questioned.

But bankers like Anil Gyawali, chief executive of Nabil Bank, said the sector acted imprudently by overspending its resources in one sector; readily took the risks and enjoyed good returns as well.

“Now that time has come to bear the cost, we should not try to escape by saying we cannot afford that,” he said.
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NC, UML CONCERNED WITH DISSOLUTION LOCAL BODIES BY MAOIST MINISTER
Kathmandu, 5 Jan : Leaders of the Nepali Congress (NC) and the CPN-UML have expressed concern over the government decision to dissolve the all-party mechanism at local bodies without first consulting them,
Republica.reports

Talking to Republica, NC leader Ram Chandra Paudel said that the issue should have been discussed among parties before the Ministry of Local Development dissolved the mechanism in line with the directive from the Commission for the Investigation of Abuse of Authority (CIAA).

“We had proposed the Maoists last March to hold the election of the local bodies but they turned a deaf ear,” said Paudel, “We are concerned that the decision was taken without consulting other political parties and finalizing alternatives,” said Paudel.

Local Development Minister Top Bahadur Rayamajhi dissolved the mechanism on Tuesday, respecting a week-old directive of the CIAA that found the mechanism plagued by rampant anomalies.

“All political parties should be held responsible for the anomalies. But as the Maoist leaders had headed the mechanism, the UCPN (Maoist) party should be held more responsible,” said Paudel.

CPN-UML leader Bhim Rawal said the party has taken the dismissal of the mechanisms seriously but said they are more focused on issues relating to the constitution making and the peace process. “Once these issues are finalized, we will discuss the issue of local bodies,” said Rawal. He stated that dissolving the all-party mechanism will not ensure good governance at the local bodies.

“Running of local bodies by bureaucrats does not guarantee good governance,” he said.

Meanwhile, the government is making preparations to form a new mechanism to run the local governments.

“The MoLD is considering various alternatives to run the local bodies,” said Rayamajhi at the Reporters´ Club Nepal on Wednesday afternoon, adding, “We will come up with an appropriate alternative within 8-10 days after holding discussions with all political parties.”

However, he opined that holding election of the local bodies would be the best solution to the issue.

Defending the government move to dissolve the local bodies, Rayamajhi said, “It was not necessary to hold talks among political parties as the mechanisms were not formed in consultation with other parties.”
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