Report on Nepal

8/11/2019 Report on Nepal

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REPORT ON NEPAL BUSINESS PERSPECTIVE

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Letter of Transmittal

Zain Ul Abideen .

BUITMS UniversityTown, Quetta . Dec 20 th , 2012

Ms. Irum GullProfessor of Business CommunicationBaluchistan University of Information Technology,Engineering and Management SciencesCity Campus, Quetta

Subject: Report on Nepal A Business and Cultural Perspective

Dear Ms. Gull,

I have the honor to present to you the Comprehensive report on Nepal aboutBusiness Growth, opportunities and prosperity according to the guidelines youprovided us during the session.

We have started the analysis on report from last December 10 th , 2012 and

finished it on December 20 th , 2012. The main purpose of this report is to master aset of concepts on how to make an effective Report. The Report shows a detailscope of opportunities, perspective, and key points that makes easier to developa business in Nepal.

This was made through the help of assigned group members in the session ofMBA Programs.

We hope that this report will merit your approval.

Respectfully yours,

Zain Ul Abideen


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Acknowledgment

We have taken efforts in this project. However, it would not have been possible without the kindsupport and help of many members, individuals and organizations. We would like to extend my sincerethanks to all of them.

We are highly indebted to Ms. Irum Gull for their guidance and constant supervision as well as forproviding necessary information regarding the Report for her support in completing the Report.

We would like to express our gratitude towards our parents & members ( Ms. Shaista Nouroz, Ms.Shaheen Khetran, Mr. Ahmad Kamal, Mr. Asim, Mr. Farrukh, Mr. Maqbool and Mr. Zain Ul Abideen )for their kind co-operation and encouragement that help us in completion of this project.

We would like to express our special gratitude and thanks to concerned authorities for giving us suchattention, time and resources.

Our thanks and appreciations go to colleague in developing the report and people who have willinglyhelped me out with their abilities.


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Executive Summary

This report will comprehensively cover Nepal that is the worlds 93rd largest country by land mass and

the 41st most populous country. It is located in the Himalayas and bordered to the north by the People's

Republic of China, and to the south, east, and west by the Republic of India. This report will dig theavailable business opportunities covering all aspects of Demography, Culture, Etiquettes and Social

Norms of Nepalese in order to engage in successful business relationships


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Doing Business in NepalFederal Democratic Republic of Nepal is a landlocked sovereign state located in South Asia. With an areaof 147,181 square kilometers (56,827 sq. mi) and a population of approximately 27 million (and nearly 2million absentee workers living abroad), Nepal is the world's 93rd largest country by land mass and the41st most populous country. It is located in the Himalayas and bordered to the north by the People'sRepublic of China, and to the south, east, and west by the Republic of India. Specifically, the Indianstates of Uttarakhand, Uttar Pradesh, Bihar, West Bengal, and Sikkim border Nepal, while across theHimalayas lies the Tibetan Autonomous Region. Kathmandu is the nation's capital and largestmetropolis.

Nepal has a rich geography. The mountainous north has eight of the world's ten tallest mountains,including the highest point on Earth, Mount Everest, called Sagarmatha in Nepali. It contains more than240 peaks over 20,000 ft (6,096 m) above sea level. The fertileand humid south is heavily urbanized.

With a per capita annual income of only $473, Nepal isone of the world's poorest countries (based on GrossDomestic Product).

Limited natural resources, a landlocked location,difficult topography, poor infrastructure, a weakhuman capital base and a long history of publicintervention in The economies are some of theimpediments to economic growth.

Agriculture accounts for approximately 32.35 percentof gross domestic product (GDP) and 70 percent of

employment. In the last three years real GDP growth averaged

slightly more than 4 percent per annum. The GDPgrowth rate for FY 2008/09 (mid-July to mid-July) was4.7 percent.

Nepal traditionally runs large trade and currentaccount deficits, which are offset by equally largeservice, transfer and capital account surpluses. In FY2008/09, Nepal posted a BOP surplus of $489.2 millionin FY 2008/09, and $457.2 million surplus in FY 2007/08.However, Nepal recorded a USD 274.7million balance of payments (BOP) deficit over the first four months of FY 2009/10, due largelyto an unprecedented surge in imports of gold and a significant increase in imports of machineryproducts and consumer goods.

The gross foreign exchange reserves went up by 15.6 percent to US$ 3.59 billion by the end ofFY 2008/09. As of mid- November 2009, the gross convertible foreign exchange reserve of thebanking sector stood a USD 3.36 billion, enough to finance merchandise imports of more than8.5 months.

Data SizePopulation 26,494,504

Growth Rate 1.35%

Population below 14 Yearsold

34.19%

Population of age 15 to 59 54.15

Population above 60 8.13%

The median age (Average) 20.07

The median age (Male) 19.91

The median age (Females) 20.24

Ratio (Male: Female)1, 00:94.16

Life expectancy (Average) 66.16 Years

Life expectancy (Male) 64.94

Life expectancy (Female) 67.44

Literacy Rate (Average) 65.90%

Literacy Rate (Male) 75.10%

Literacy Rate (Female) 57.40%


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Local Time, Business Hours, and Holidays

Nepals Standard Time is 5 hours 45 minutes ahead of GMT and 10 hours and 45 minutes ahead ofEastern Standard Time. Nepal does not observe daylight saving time.

All government offices and banks operate a six-day workweek from Sunday to Friday. Typical businesshours are 9 a.m. - 5 p.m. Most businesses (including stores) close on Saturday, but this is graduallychanging. Sunday is a workday in Nepal for the business community.

Date Event Days Remarks

15-Jan-12 Maghi Parba Friday12-Feb-12 Mahashivaratri Friday19-Feb-12 National Democracy Day Friday28-Feb-12 Holi/Phagu Purnima Sunday1-Mar-12 Holi/Phagu Purnima Monday For Tarai8-Mar-12 Women's Day Monday Women only

15-Mar-12 Ghode Jatra Monday In Ktm. only23-Mar-12 Chaitra Dashain Tuesday24-Mar-12 Ram Nawami Wednesday14-Apr-12 Nepali New Year Day Wednesday27-May-12 Buddha Jayanti Thursday24-Aug-12 Janaipurnima/Rakcha

BandhanTuesday

25-Aug-12 Gai Jatra Wednesday In Ktm. only1-Sep-12 Krishna Janmastami Wednesday10-Sep-12 Teej Friday Women only12-Sep-12 Rishi Panchami Sunday Women only22-Sep-12 Indrajatra Wednesday8-Oct-12 Ghatasthapana Friday14 18,Oct 12 Dashain Holidays Thursday -

Monday22-Oct-12 Kojagrat Purnima Friday7-8,Nov 12 Tihar Holidays Sunday -

Monday


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Economic Environment of NepalNepal is a landlocked state, which makes market access a serious challenge. Surface transport into andout of Nepal is severely constrained. There is only one reliable road route from India to the KathmanduValley, and parts of it are often closed by unrest and general strikes. Unrest in Terai in the last couple ofyears has seriously disrupted movement of goods in and out of Nepal. The only practical seaport forentry of goods bound for Nepal is Kolkata, India, about 650 miles from the Nepal-India border.

Government of Nepal (GON) is open to foreign direct investment, but implementation of its policies isoften distorted by bureaucratic delays and inefficiency. Foreign investors constantly complain aboutcomplex and opaque government procedures and a working-level attitude that is more hostile thanaccommodating. A foreign company must either be registered in Nepal as a foreign investor under theForeign Investment and Technology Transfer Act of 1992,or have a permit to import and export commodities andservices.

High customs tariffs imposed on most manufacturedproducts increase the price of U.S. products in the Nepalimarket. Foreign investors must deal with a non-transparent legal system. Firms complain that basic legalprocedures are neither quick nor routine. The bureaucracyis generally reluctant to accept legal precedents.Consequently, businesses are often forced to re-litigateissues that had been previously settled. Furthermore,legislation banning foreign investment in financial, legal,and accounting services has made it difficult for investors

to find help cutting through regulatory red tape.

U.S. firms and other foreign investors have identifiedpervasive corruption as an obstacle to maintaining andexpanding direct investment in Nepal. There are alsofrequent allegations of corruption by Nepali governmentofficials in the distribution of permits and approvals,procurement of goods and services, and award ofcontracts.

Political instability has created numerous obstacles to doing business in Nepal, where there have been17 governments in the past 19 years. Deep division between and within the member parties hampersthe current 22-party coalition government. Since the May 2009 fall of the government it led, the UnifiedCommunist Party of Nepal (Maoist) has conducted widespread protests, and its affiliated youth groupand unions have engaged in a range of violent activities, including strikes and land seizures.

Market OpportunitiesNepal's overall potential as a market for U.S. exports is very modest.

Data SizePopulation 26,494,504

Growth Rate 1.35%

Population below 14 Yearsold

34.19%

Population of age 15 to 59 54.15

Population above 60 8.13%

The median age (Average) 20.07

The median age (Male) 19.91

The median age (Females) 20.24

Ratio (Male: Female) 1, 00:94.16

Life expectancy (Average) 66.16 Years

Life expectancy (Male) 64.94Life expectancy (Female) 67.44

Literacy Rate (Average) 65.90%

Literacy Rate (Male) 75.10%

Literacy Rate (Female) 57.40%


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peripherals, heavy equipment, hydropower equipment, and aircraft parts. U.S. computers andperipheral equipment and telecommunications equipment are highly competitive in the local market.

infrastructure.

-megawattWest Seti Project, which is being developed by an Australianconsortium; 300-MW Upper Karnali Hydroelectric Project, which isbeing developed by a consortium of GMR Energy Ltd. India and theItalian-Thai Development Project Co. (ITD) of Thailand; the 456-MW Upper Tamakoshi Hydroelectric Project, which is beingdeveloped by a Nepali consortium; and the 402 MW Arun-IIIHydro Electric Project, which is being developed by an Indian

company Satluj Jal Vidyut Nigam Limited. Nepals Department ofElectricity Development (DOED) opened the development of theseprojects to foreign investment. Nepal expects to addapproximately 10,000 megawatts to its generating capacity overthe next decade.

aviation sector, the Ministry of Culture, Tourism, andCivil Aviation (MOCTCA) plans to build a number of airports andinvite tenders from foreign investors. Twice in the past threeyears, the MOCTCA invited proposals from foreign companies todevelop the airports on a Build-Own-Operate-Transfer (BOOT)basis, but due to the unfavorable investment climate caused byunstable political situation, investors stayed away.

-million expansion of telecom network and services, which isexpected to begin in FY 2009/10, hold potential for U.S. business.

-10) for equipment sales, network installation and laying fiber optic.

Natural resources

Main industries

Main import products

Import partners

Export partners


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Political System of NepalPolitical instability has created numerous obstacles to doing business in Nepal, where there have been17 governments in the past 19 years. The current 22-party coalition government is hampered by deepdivision between and within the member parties. Since the May 2009 fall of the government it led, theUnified Communist Party of Nepal (Maoist) has conducted widespread protests, and its affiliated youthgroup and unions have engaged in a range of violent activities, including strikes and land seizures.

Nepal is a multi-party system federal republic. The Interim Constitution of Nepal, 2063 has defined threeorgans of the government.

Executive : The executive power of Nepal is vested in the Council of Ministers. Theresponsibility of issuing general directives, controlling and regulating the administration ofNepal lie in the Council of Ministers. The Prime Minister of Nepal is the head of theGovernment. The Prime Minister appoints the Ministers. While appointing Ministers, the PrimeMinister shall appoint them, on the recommendation of the concerned political party, from

amongst the members of the Legislature-Parliament.

Legislative : The Legislature-Parliament of Nepal is unicameral. Constituent assembly is workingas three legislature of Nepal at present. Legislative is composed of 601 members. Among them,240 members are directly elected by the people from 240 constituencies. 335 members areelected through proportional basis and 26 members are nominated by the cabinet. All the billsare presented in the parliament. After passing the bills by the majority. After his approval, itbecomes the law. In this way, all the laws are made in the parliament. The legislative controlsover the finance of the country. Legislative passes the annual budget according to which thegovernment spends money in various tasks. Legislative can raise questions to any work of the

government. If the government does not work properly, legislative can withdraw its support andgovernment is dissolved. In this way, the legislative has control over the executive.

Judiciary : The Constitution provides three tiers of Court, which include the Supreme Court ofNepal, the Court of Appeal and the District Courts. Supreme Court is the Apex Court. All courtsand judicial institutions except the constitutional assembly court, are under the supreme court.There is no distinction between Criminal and Civil court except some basic procedures. DistrictCourt is the Court of first instance upon which Court of Appeal hear appeal. In addition to theseregular courts there is provision in constitution to establish special types of courts or tribunalsfor the purpose of hearing special types of cases by the law. According to these provision thereare four Revenue Tribunals, one Administrative Court, one Labor Court, one Debt Recoverytribunal and one Debt recovery Appeal Tribunal and one special court are functioning under therespective laws. These institutions are under the judicial control of the Supreme Court. Thereare 16 Court of Appeal and 15 Districts in Nepal. The Supreme Court is also the ultimateinterpreter of the constitution.


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Climate of NepalNepal has four climatic seasons:

Spring (between March May) : The temperature is mildly warm in low lands while moderate inhigher altitudes with plenty of opportunities to have tryst with the mountain views. It is also the time for

flowers to blossom and the national flower of Nepal rhododendron sweeps the ascending altitudes withits magnanimous color and beauty.

Summer (between Junes August) : This is also the monsoon season in Nepal. The weather is hotand wet at times. It rains almost every day with occasional thunderstorms in the evening. The rainspreads the pleasantness around with lush green vegetation.

Autumn (between Septembers November) : This is the best tourist season in Nepal with thesummer gone by and the winter to set in. The weather is highly pleasant so are the mountain views. Thisis the peak season for trekking as mountain views are guaranteed so better book your flight in advance.Tihar also the season of festivities as Nepal celebrates the biggest Hindu festivals dashing follows this.

Winter (between Decembers February) : The weather is cool and the sky is clear with occasionalsnowfalls at higher elevations. This season is good for trekking in lower elevations. The morning andnight is cold and the days are warm when sunny.

Temperature & rainfall

Nepal is the country of extremes. The lowland plains of the Terai can have tropical temperatures andalso the mosquitoes. The Himalayas can get to sub-zero temperatures, but the sun blaze can bring somewarmth during the day, even in the mountains. The temperature of Kathmandu goes below 1 Degree

Celsius (34 Degree Fahrenheit) in winter and rises to an average of 25 Degree Celsius (77 DegreeFahrenheit) in summer.

The average temperature in Kathmandu during the four seasons:

Spring season ranges between 16-23 Degree Celsius (61-73 Degree Fahrenheit) Summer season ranges between 23-25 Degree Celsius (73-77 Degree Fahrenheit) Autumn season ranges between 15-24 Degree Celsius (59-75 Degree Fahrenheit) Winter season ranges between 9-12 Degree Celsius (48-54 Degree Fahrenheit)


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Land of NepalGeographically, Nepal comprises three major areas. The south, known as the Terai, is a comparativelylow region of cultivable land, swamps, and forests that provide valuable timber. In the north is the mainsection of the Himalayas, including Mt. Everest (29,029 ft/8,848 m), the world's highest peak. Nepal'smajor rivers, which rise in Tibet, rush through deep Himalayan gorges. Central Nepal, an area ofmoderately high mountains, contains the Katmandu valley, orValley of Nepal, the country's most densely populated regionand its administrative, economic, and cultural center. Nepal'srailroads, connecting with lines in India, do not reach thevalley, which is served by a highway and a bridge like cableline. There are a few other modern highways.

The population of Nepal is the result of a long intermingling ofMongolians, who migrated from the north (especially Tibet),and peoples who came from the Ganges plain in the south.The chief ethnic group, the Newars, was probably the originalinhabitants of the Katmandu valley. Other groups include theChettris, Brahmans, Magars, Tharus, and Gurungs. Severalethnic groups are classified together as Bhotias; among themare the Sherpas, famous for guiding mountain-climbing expeditions, and the Gurkhas, a term sometimesloosely applied to the fighting castes, which achieved fame in the British Indian army and continue toserve as mercenaries in India's army and in the British overseas forces. Nepali, the country's officiallanguage, is an Indo-European language and has similarities to Hindi. Tibeto-Burman languages, Mundalanguages, and various Indo-Aryan dialects are also spoken. About 80% of the people are Hindu, about10% are Tibetan Buddhists, and there are smaller groups of Muslims and others. Tribal and castedistinctions are still important. The royal family is Hindu, and until 2006 the country was officially aHindu kingdom.


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Fooding & Habitual Values of Nepal

The food of Nepal is as diverse as the country itself. The Nepalese recipes are quick to cook and good toeat. Nepalese food is famous for its nutrition level and tempting taste. Whilst Nepalese cuisine issomewhat basic, it certainly does not lack in flavor, making extensive use of spices and flavorings such as

ginger, garlic, coriander, pepper, cumin, chilies, cilantro, mustard oil, ghee and occasionally yak butter.Come let us savor some of the famous dishes of Nepal.

Eating Habits Main Meal In most part of country, especially rice-growing areas, DalBhat (pulses and rice) is the staple food ofNepalese that is eaten twice a day.

Snacking

Snacks such as bread, chura (beaten rice), roti (flat bread), curried vegetables, milked tea and othersnacks are also generally eaten in between the two big meals.Famous Nepalese Cuisine

Gundrook- DheedoEqually popular among Nepali people and foreign tourists, Gundrook-Dheedo is a sugar-free dish madeof wheat, maize and dried green vegetable. The food is high on nutrition level and satisfies the tastebuds as well.

Alu Tama

Aloo Tama (Alu Tama) simply means 'Potato Bamboo Shoots'. It is a unique and classic Nepali curryflavor dish. It is unique in the sense that it is unlike any other Indian or South Asian curry since theyrarely use bamboo shoots. Similarly, unlike other East Asian cuisine such as Chinese that uses Bambooshoots but does not use curry spices.

Vegetable Pulao (Fried Nepali Rice) Vegetable Pulao is one of the popular ways rice is served during the parties and events in the Nepalesehousehold. It has flavor of turmeric and cumin to it. The rice is particularly famous among tourists whoprefer eating it with curd and Manchurian.

MasuMasu is spiced or curried meat (usually chicken, mutton, buffalo or pork) with gravy. Served with rice, itis a main course dish, very popular in Nepal.

Vegetable Thukpa (Egg Noodles)This is a seasonal dish. Tibetan Vegetable Thukpa is one of the main food. During Tibetan new yearcelebration 'Losar'the dish is a part of celebration and tradition for the Nepalese.


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The following languages

are spoken by at least 1

percent of the population:

Nepali (88.61%.)MaithiliBhojpuriTharuTamang

Newari/Nepal BhasalanguageMagarAwadhiBantawaGurung/TamuLimbuBajjika

Languages of NepalThere are some 120 native languages of Nepal, belonging to the Indo-Aryan, Sino-Tibetan, Austro-Asiatic

and Dravidian language families. The official language of Nepal is Nepali ( ), formerly called

Khaskura then Gorkhali. The 2011 census counted 25 million native speakers inNepal and it is spoken as a second language by millions more. It isalso spoken in parts of India and Bhutan.

Three quarters of the 120-some languages native to Nepal belongto the Tibeto-Burman language family; this includes Nepal Bhasa(Newar) (the original language of Kathmandu), the Tamang, Magarand various Rai and Limbu languages. However, the official andnumerically most important language, Nepali (Gorkhali), belongs tothe Indo-Aryan (Indic) branch of the Indo-European family, so thatIndic languages constitute 79% of the population to Tibeto-Burman's 18%, even though most languages of both families arespoken by small numbers of people.

The Dravidian languages are represented by Kurux, and the Mundalanguages of the Austro-Asiatic family by Santali and Mundari. Theindigenous languages of Nepal that predated the influx of Indic,Tibeto-Burman, and other families barely survive in the Kusundalanguage, which is nearly extinct today.

Nepal also has at least two indigenous village sign languages, in addition to the Nepali Sign Language

designed for national use.

Nepali is spoken as a lingua franca by almost 90% of population and another 10% can speak it as asecond language fluently. The older generations groups in Nepal can speak many indigenous languagesbut in very less numbers.


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ConclusionNepal has a rich geography. The mountainous north has eight of the world's ten tallest mountains,

including the highest point on Earth, Mount Everest, called Sagarmatha in Nepali. Nepal is a landlocked

state, which makes market access a serious challenge. Surface transport into and out of Nepal is

severely constrained. There is only one reliable road route from India to the Kathmandu Valley, and

parts of it are often closed by unrest and general strikes. Unrest in Terai in the last couple of years has

seriously disrupted movement of goods in and out of Nepal.

Hence, our findings conclude that industries like Tourism and Telecom has wide level of growth available

and Nepal has potential to capture better opportunities due to their political situation and Purchasing

Power of individuals.


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References

FAA Internet home page: http://www.faa.gov/avr/iasa.htm

U.S. Embassy's home page: http://nepal.usembassy.gov/

Department of Immigration, GON: http://www.immi.gov.np/main.php

Centers for Disease Control and Prevention: http://www.cdc.gov

State Departments Info Sheet: http://travel.state.gov/travel/

Indian Airlines: http://indian-airlines.nic.in/scripts/index.asp

Gulf Air: http://www.gulfairco.com/index/index.asp

Qatar Airways: http://www.qatarairways.com/

Nepal Airlines: http://www.royalnepal-airlines.com/

Thai Airways: http://www.thaiair.com/

Documents

Report on Nepal